A Gravity Model Estimation of the Bi-Directional Relationship between International Trade and Migration

Rosmaiza A. Ghani (), Michael Cameron, William Cochrane () and Matthew Roskruge
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Rosmaiza A. Ghani: University of Waikato
William Cochrane: University of Waikato

Working Papers in Economics from University of Waikato

Abstract: The relationships between migration and trade are a continuing source of debate in the academic literature. Some studies have found that migration and trade are complements, while other studies have found them to be substitutes. Still other studies have found that there is no statistically significant relationship between them. However, the majority of previous empirical studies have focused on the relationship between trade and migration in either a single country, a single region, or within a single trade agreement. This paper examines the bi-directional relationship between trade and migration using international bilateral trade and migration flows data for 248 countries over the period 1990-2010. We also account for other relevant covariates within a seemingly-unrelated regression gravity model framework. Our findings suggest that trade and migration are complements - larger migration flows are associated with larger trade flows, and vice versa. The relationships with other relevant covariates are as expected, with the exception that distance is positively and statistically significantly related to migration. Although our results do not definitively demonstrate causality, they suggest that, if world trade decreases due to countries acting on current protectionist sentiments, migration flows might also be expected to decline.

Keywords: international trade; international migration; gravity model (search for similar items in EconPapers)
JEL-codes: F14 F22 O24 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2019-02-28
New Economics Papers: this item is included in nep-int and nep-mig
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Citations: View citations in EconPapers (1)

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