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Migrants, Ancestors, and Investments

Listed author(s):
  • Thomas Chaney

    (Toulouse School of Economics)

  • Tarek Hassan

    (The University of Chicago)

  • Konrad Burchardi

    (Institute for International Economic Stu)

We use 130 years of data on historical migrations to the United States to show a causal effect of the ancestry composition of US counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: migrations from a foreign country to a US county at a given time depend on (i) a push factor, causing emigration from that foreign country to the entire United States, and (ii) a pull factor, causing immigration from all origins into that US county. The interaction between time-series variation in origin-specific push factors and destination-specific pull factors generates quasi-random variation in the allocation of migrants across US counties. We find that a doubling of the number of residents with ancestry from a given foreign country relative to the mean increases by 4.3 percentage points the probability that at least one local rm invests in that country, and increases by 36% the number of employees at domestic recipients of FDI from that country.

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Paper provided by Society for Economic Dynamics in its series 2016 Meeting Papers with number 1311.

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Date of creation: 2016
Handle: RePEc:red:sed016:1311
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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