On the pro-trade effects of immigrants

Abstract

In this paper we investigate the causal effect of immigration on trade flows using Italian panel data at the province level. We exploit the exceptional characteristics of the Italian data (the fine geographical disaggregation, the very high number of countries of origin of immigrants, the high heterogeneity of social and economic characteristics of Italian provinces, and the absence of cultural or historical ties) and an empirical strategy based on the comparison of estimates at the NUTS-2 and NUTS-3 geographical level, on the use of a wide set of fixed effects, and on instrument based on immigrants' enclaves. The results are that immigrants have a significant positive effect on both exports and imports, much larger for the latter. The pro-trade effects of immigrants tend to decline in space, and even turn negative when large ethnic communities are located too far away from a specific province (via a trade-diversion effect). Finally, we give evidence of a substantial heterogeneity in the effects of immigrants: the impact on trade tends to be larger for immigrants coming from low-income countries, for earlier waves of immigrants and for the less advanced provinces of Southern Italy. AbstractIn this paper we investigate the causal effect of immigration on trade flows using Italian panel data at the province level. We exploit the exceptional characteristics of the Italian data (the fine geographical disaggregation, the very high number of countries of origin of immigrants, the high heterogeneity of social and economic characteristics of Italian provinces, and the absence of cultural or historical ties) and an empirical strategy based on the comparison of estimates at the NUTS-2 and NUTS-3 geographical level, on the use of a wide set of fixed effects, and on instrument based on immigrants' enclaves. The results are that immigrants have a significant positive effect on both exports and imports, much larger for the latter. The pro-trade effects of immigrants tend to decline in space, and even turn negative when large ethnic communities are located too far away from a specific province (via a trade-diversion effect). Finally, we give evidence of a substantial heterogeneity in the effects of immigrants: the impact on trade tends to be larger for immigrants coming from low-income countries, for earlier waves of immigrants and for the less advanced provinces of Southern Italy. JEL Classification

Immigrant entrepreneurs, diasporas, and exports

“…In what follows, we will often refer to nonentrepreneurial immigrants (NE immigrants for brevity) simply as “immigrants,” or diasporas . The ordinary least squares (OLS) estimates on the sample of observations with positive exports return a coefficient of 0.115, which is in line with the findings of the existing literature (see, for instance, Figure in Bratti et al, ). Column (2) reports the OLS results where the stocks of immigrants and of immigrant entrepreneurs are entered separately in the regression.…”

“…Indeed, both nonentrepreneurial immigrants and immigrant entrepreneurs contribute to increasing a province's exports toward their countries of origin (dyadic effects mainly relating to the informational channel). Second, unlike other papers that have only focused on dyadic effects (see, for instance, Bratti et al, ), our paper also uncovers a generalized positive effect of immigrant entrepreneurs on export flows toward all destinations. In line with our conceptual framework, this last effect might be produced by an increase in firm productivity, which overcomes the cutoff necessary to bear the fixed costs of exporting.…”

Proximity, trade and ethnic networks of migrants: case study for France and Egypt

“…Finally, in terms of methodology we opt for panel data techniques in order to cope with unobserved heterogeneity issues, also dealing with endogeneity problems in an IV setting. All these are relevant questions in this literature as shown by previous authors (Felbermayr and Jung, 2009;Bratti et al, 2014).…”

Temporary expats for exports: micro-level evidence

“…45 The results are presented in Table 3, and include the within-firm-country associations between trade partner-specific investment for exports through the period that experienced first entry into export of services and that also hired their first temporary expat from that country 45 To avoid truncation, we define the response variable as x fjtÀ0 ¼ ln export value þ 1e À7 ð Þ ; This is practical since our within-firm-country estimations already are very demanding. Furthermore, this approach is commonly adopted in the literature (Eichengreen and Irwin 1995;Dunlevy 2006;Lewer 2006;Peri and Requena-Silvente 2010;Bratti et al 2014;Coughlin and Wall 2011;Artal-Tur et al 2012). In essence, the approach mimics a semi-log Tobit (Eichengreen and Irwin 1995;Dunlevy and Hutchinson 1999).…”