Do Foreign Workers Reduce Trade Barriers? Microeconomic Evidence

Abstract

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Immigrant entrepreneurs, diasporas, and exports

“…Hatzigeorgiou and Lodefalk (), in an employer–employee panel for Sweden, show that small firms in particular can gain from hiring foreign‐born workers who are skilled and recently arrived immigrants. Similar evidence of a positive effect of foreign employees on trade is found for Denmark (Hiller, ), France (Marchal & Nedoncelle, ; Mitaritonna, Orefice, & Peri, ), and Germany (Andrews, Schank, & Upward, ), especially for skilled or senior workers.…”

Immigrants, occupations and firm export performance

“…We assume that immigrants in decisional and operative jobs (such as high‐skilled occupations) decrease export costs toward destination j , so that and . In line with empirical evidence, we assume that these workers provide operational information about their origin country that eventually allows their firm to overcome trade barriers for that particular destination; we also consider that these immigrant workers have a general knowledge of foreign markets that allows them to lower export costs toward other destinations (Andrews et al., ; Hatzigeorgiou & Lodefalk, ; Parsons & Winters, ). Finally, we account for non‐linearities in the effect of immigrant employment by allowing these derivatives to equal zero.…”

“…Then, Andrews et al. () provide evidence on the cost‐decreasing effect of high‐skilled immigrants at the firm level in Germany. They find that senior immigrants have a stronger export‐enhancing effect as they are more likely to hold managerial positions and to influence export decisions.…”

“…We revisit two strands of literature. On the one hand, empirical evidence shows that the export‐enhancing effect of immigrants is related to the information they convey on foreign countries (Andrews, Schank, & Upward, ; Hatzigeorgiou & Lodefalk, ; Parrotta, Pozzoli, & Sala, ; Hiller, ; Peri & Requena‐Silvente, ). Existing firm‐level studies show that immigrants possess valuable knowledge on foreign markets that decreases variable and fixed costs faced by exporters.…”

International Trade and Labor Market Integration of Immigrants

“…For instance, whereas the effect of international trade on labor market integration of immigrants has not previously been analyzed, the positive effect of migration on international trade is well established. For instance, Hiller (2013), Hatzigeorgiou and Lodefalk (2016), Andrews et al (2017) found a positive relationship between firms' employment of immigrants and exports to the home country of the immigrants. Moreover, Bastos and Silva (2012) used historical Portuguese emigration to examine a causal effect of foreign networks on firms' exports, finding relatively large Portuguese exports to countries with a large Portuguese diaspora.…”