Enhancing Trade Through Migration. A Gravity Model of the Network Effect

Laura Casi. ()

No 35, ISLA Working Papers from ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy

Abstract: While trade liberalization has always been the core of common policies, only in very recent years Europe has started to address the challenge of migration in a comprehensive way. Conventional wisdom considers potential gains from liberalizing trade much higher for European countries than the benefits deriving from liberalization of migration. This paper gives evidence of the benefits European host countries had from immigration, identifying trade channel as the key driver of these benefits. It focuses on 17 European Union member states and 10 extra-European partners with the highest immigration flows towards the EU-27. The period considered is the decade 1997-2006. Controlling for endogeneity, the results I obtain suggest that migration have a statistically significant and robust enhancing effect on European countries exports, this effect being particularly important when considering differentiated commodities rather than homogeneous goods. This confirms the importance of the “network effect” of migration for European countries. Evidence on imports, instead, is puzzled. To my knowledge this is the first attempt in the literature to test the trade enhancing effect of migration using a panel, including a consistent number of European Countries and extra-European partner quite different in terms of geographical location, socio-economics and cultural characteristics and inspecting such recent years. This further extends existing evidence on the network effect and allows considering the results valid in a cross-country analysis over time.

Keywords: International Migration; Economic Integration; Networks; Europe. (search for similar items in EconPapers)
JEL-codes: F15 F22 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2009-10
New Economics Papers: this item is included in nep-eec, nep-int, nep-mig and nep-net
References: Add references at CitEc
Citations:

Downloads: (external link)
ftp://ftp.unibocconi.it/pub/RePEc/slp/papers/islawp35.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Failed to connect to FTP server ftp.unibocconi.it: No such host is known.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:slp:islawp:islawp35

Access Statistics for this paper

More papers in ISLA Working Papers from ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy via Sarfatti, 25 - 20136 Milano - Italy.
Bibliographic data for series maintained by Stefano Riela ().