Immigration and firms’ integration in international production networks

Peter Egger, Katharina Erhardt () and Andrea Lassmann

European Economic Review, 2019, vol. 111, issue C, 1-34

Abstract: This paper uses panel data on cross-border migration and transaction-level trade for Swiss municipalities to identify the effect of migration networks on specific margins of the integration of firms in global value chains. We find that the stability of an international supplier-buyer relationship is strongly associated with a-priori knowledge about the supplier’s origin as measured by the migrant network with the same country of origin present in the buyer’s immediate environment (here, a municipality). Not only do firms engage in more stable input trading relationships and intensify relationships in terms of input trading volume, but they reduce the total number of suppliers in a given country in response to an increase of immigration from there. These results are in line with a theoretical framework where firms’ sourcing strategies are subject to incomplete information. Firms diversify their foreign supplier network in order to be less susceptible to potential bad shocks. Once informational barriers are lifted, firms contract fewer suppliers but purchase a larger volume from each of them.

Keywords: Migration; International trade; Global value chains; Instrumental variables (search for similar items in EconPapers)
JEL-codes: F16 F22 F23 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292118301600
Full text for ScienceDirect subscribers only

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:eee:eecrev:v:111:y:2019:i:c:p:1-34

DOI: 10.1016/j.euroecorev.2018.08.009

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().