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A Gravity Model Estimation of the Bi-Directional Relationship between International Trade and Migration

Author

Listed:
  • Rosmaiza A. Ghani

    (University of Waikato)

  • Michael P. Cameron

    (University of Waikato)

  • William Cochrane

    (University of Waikato)

  • Matthew Roskruge

    (Massey University)

Abstract

The relationships between migration and trade are a continuing source of debate in the academic literature. Some studies have found that migration and trade are complements, while other studies have found them to be substitutes. Still other studies have found that there is no statistically significant relationship between them. However, the majority of previous empirical studies have focused on the relationship between trade and migration in either a single country, a single region, or within a single trade agreement. This paper examines the bi-directional relationship between trade and migration using international bilateral trade and migration flows data for 248 countries over the period 1990-2010. We also account for other relevant covariates within a seemingly-unrelated regression gravity model framework. Our findings suggest that trade and migration are complements - larger migration flows are associated with larger trade flows, and vice versa. The relationships with other relevant covariates are as expected, with the exception that distance is positively and statistically significantly related to migration. Although our results do not definitively demonstrate causality, they suggest that, if world trade decreases due to countries acting on current protectionist sentiments, migration flows might also be expected to decline.

Suggested Citation

  • Rosmaiza A. Ghani & Michael P. Cameron & William Cochrane & Matthew Roskruge, 2019. "A Gravity Model Estimation of the Bi-Directional Relationship between International Trade and Migration," Working Papers in Economics 19/02, University of Waikato.
    • Handle: RePEc:wai:econwp:19/02
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    Cited by:

    1. Rosmaiza Abdul Ghani & Michael P. Cameron & William Cochrane & Matthew Roskruge, 2020. "The Causal Impact of Trade on Migration: A Gravity Model Estimation," Working Papers in Economics 20/01, University of Waikato.

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    More about this item

    Keywords

    international trade; international migration; gravity model;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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