Working Papers, Swedish Business School, Örebro University
No 2011:6:
Trade and Migration: Firm-Level Evidence (LONG VERSION)
Andreas Hatzigeorgiou ()
and Magnus Lodefalk ()
Abstract: Migration has been associated with higher levels of trade.
Previous studies interpret this as evidence of migrants’ ability to lower
trade costs. Nevertheless, no study has investigated the impact of migrants
on firms’ foreign trade. Thus, they fail to both provide evidence on the
role that migrants may play in lowering firms’ trade costs, and exactly
through which mechanisms the impact is derived. This study, being the first
to study in depth the impact of immigration on trade at the firm level,
bridges this gap in research. It utilizes new and unique employer-employee
data for 12,000 Swedish firms, for the period 1998-2007, in a firm-level
gravity framework. It provides novel firm-level evidence, demonstrating a
significant, positive, and robust impact of immigrants in raising firms’
foreign trade. Migrants are found to increase trade both on the extensive
and intensive product margin. Further, the study is able to conclude that
the sustained effect mainly derives from lower information frictions
through superior knowledge of foreign-markets, although contacts are also
important.
Keywords: trade costs; information; trust; migration; heterogeneous firms; gravity; firmlevel data; product margins; (follow links to similar papers)
JEL-Codes: D22; D83; F14; F22; (follow links to similar papers)
87 pages, December 12, 2011
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