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On the pro-trade effects of immigrants

  • Massimiliano Bratti
  • Luca De Benedictis
  • Gianluca Santoni

In this paper we investigate the causal effect of immigration on trade ows using Italian panel data at the province level. We exploit the exceptional characteristics of the Italian data (the fine geographical disaggregation, the very high number of countries of origin of immigrants, the high heterogeneity of social and economic characteristics of Italian provinces, and the absence of cultural or historical ties) and an empirical strategy based on the comparison of estimates at the NUTS-2 and NUTS-3 geographical level, on the use of a wide set of fixed effects, and on instrument based on immigrants' enclaves. The results are that immigrants have a significant positive effect on both exports and imports, much larger for the latter. The pro-trade effects of immigrants tend to decline in space, and even turn negative when large ethnic communities are located too far away from a specific province (via a trade-diversion effect). Finally, we give evidence of a substantial heterogeneity in the effects of immigrants: the impact on trade tends to be larger for immigrants coming from low-income countries, for earlier waves of immigrants and for the less advanced provinces of Southern Italy.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 13-014.

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Length: 44 p.
Date of creation: 20 Feb 2013
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Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/141126
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