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The network of migrants and international trade

Rodolfo Metulini (), Paolo Sgrignoli, Stefano Schiavo and Massimo Riccaboni ()

Economia Politica: Journal of Analytical and Institutional Economics, 2018, vol. 35, issue 3, No 4, 763-787

Abstract: Abstract This paper investigates the relationship between international trade and migration with the specific aim of estimating direct and indirect effect of the latter on cross-border flows of both homogeneous and differentiated goods. Adopting a spatial econometric approach along with a gravity model set-up, we account for the role of ethnic communities in neighbouring countries on trade, and we propose a new way to define neighbours based on the intensity of links in the migration network. Our approach is particularly well suited to measure the indirect effect stemming from the presence of significant ethnic communities on trade through a “market familiarization” effect. Using data covering all countries between 1970 and 2000, we find a significant indirect effect of migration on trade, that depends on the chosen weight matrix.

Keywords: Trade; Migration; Gravity model; Spatial econometrics; Networks (search for similar items in EconPapers)
JEL-codes: F14 F22 C21 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s40888-018-0106-6

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Handle: RePEc:spr:epolit:v:35:y:2018:i:3:d:10.1007_s40888-018-0106-6