Trade, Migration and Integration – Evidence and Policy Implications

Andreas Hatzigeorgiou () and Magnus Lodefalk
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Andreas Hatzigeorgiou: Lund University

No 2014:5, Working Papers from Örebro University, School of Business

Abstract: This paper takes departure in the unique position taken by Swedish policymakers recently in giving explicit emphasis to migration as a tool for increasing trade. We attempt to put this position to empirical scrutiny. Our results demonstrate that migrants spur exports, especially along the extensive product margin of trade and for differentiated products, but with no significant impact on imports. This suggests that for small open economies with many immigrants being refugees, the aim of using migration to facilitate trade may only be effective with respect to exports. This paper also contributes to the literature on trade and migration by exploiting data on gender and age, which allow us to draw inferences on the underlying impact channels. We adopt an instrumental variable approach to address the endogeneity issue due to potential reverse causality. The pattern of results is consistent with the hypothesis that migration mainly reduces fixed trade costs derived from information and trust friction across migrant host and source countries. Importantly, the results imply that policymakers may be able to promote trade by improving immigrants’ labor market integration rather than being restricted to more liberal immigration policies, which is generally more controversial.

Keywords: Trade; migration; gravity model; trade COSTs; networks; information; trust; trade policy (search for similar items in EconPapers)
JEL-codes: F10 F14 F22 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2014-07-31
New Economics Papers: this item is included in nep-int and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Hatzigeorgiou, Andreas and Magnus Lodefalk, 'Trade, Migration and Integration – Evidence and Policy Implications' in The World Economy, 2014, pages 2013-2048.

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Related works:
Journal Article: Trade, Migration and Integration – Evidence and Policy Implications (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:oruesi:2014_005

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