Do Foreign Workers Reduce Trade Barriers? Microeconomic Evidence

Martyn J. Andrews (), Thorsten Schank and Richard Upward
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Martyn J. Andrews: University of Manchester

No 9437, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides evidence that foreign workers reduce firms' trade costs and thus increase the probability that firms export. This informs both the literature on trade costs and the microeconomic literature on firms' export behaviour. We identify the nationality of each worker in a large sample of German establishments, and relate this to the exporting behaviour of these establishments. We allow for the possible endogeneity of an establishment's workforce by instrumenting the share of foreign workers with the regional distribution of foreign workers in the wider labour market. We find a significant effect of worker nationality on exporting which is not driven by the industrial, occupational or locational concentration of migrants. The effect is much stronger for senior occupations, which are more likely to have a role in exporting decisions by the establishment. The relationship is also stronger when we consider exports to particular regions and workers from these regions, consistent with a gravity model in which trade flows from country i to j are a function of migrants from j in i.

Keywords: international migration; trade barriers; exports; employer-employee data; firm-level analysis (search for similar items in EconPapers)
JEL-codes: F16 F22 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-10
New Economics Papers: this item is included in nep-bec and nep-int
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Published - published in World Economy, 2017, 40(9), 1750-1774

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Related works:
Journal Article: Do foreign workers reduce trade barriers? Microeconomic evidence (2017)
Working Paper: Do foreign workers reduce trade barriers? Microeconomic evidence (2015)
Working Paper: Do foreign workers reduce trade barriers? Microeconomic evidence (2015)
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