The impact of immigration on international trade: a meta-analysis

Abstract

Since the early 1990s many empirical studies have been conducted on the impact of international migration on international trade, predominantly from the host country perspective. Because most studies have adopted broadly the same specification, namely a log-linear gravity model of export and import flows augmented with the logarithm of the stock of immigrants from specific source countries as an additional explanatory variable, the resulting elasticities are broadly comparable and yield a set of estimates that is well suited to meta-analysis. We therefore compile and analyze in this paper the distribution of immigration elasticities of imports and exports across 48 studies that yielded 300 observations. The results show that immigration complements rather than substitutes for trade flows between host and origin countries. Correcting for heterogeneity and publication bias, an increase in the number of immigrants by 10 percent may be expected to increase the volume of trade on average by about 1.5 percent. However, the impact is lower for trade in homogeneous goods. Over time, the growing stock of immigrants decreases the elasticities. The estimates are affected by the choice of some covariates, the nature of the data (cross-section or panel) and the estimation technique. Elasticities vary between countries in ways that cannot be fully explained by study characteristics; trade restrictions and immigration policies matter for the impact of immigration on trade. The migrant elasticity of imports is larger than that of exports in about half the countries considered, but the publication bias and heterogeneity-corrected elasticity is slightly larger for exports than for imports.

Migration and foreign direct investment: education matters

“…These studies indicate that migration has a significant impact on international (bilateral) trade, as the presence of migrants decreases trade and investment barriers. The validity of these findings is confirmed in a meta-analysis on the relationship between migration and trade (see Genc et al, 2010). Moreover, additional studies on the link between migration and international tourism have also shown a positive correlation between migration and international tourism, both on the basis of a meta-analysis and through case study research (see Gheasi et al 2009).…”

Language in International Business: A Review and Agenda for Future Research

“…Such endeavors may follow up works by Genc et al (2012), Drori et al (2009), andByram (2008), respectively. The related research into linguistic influences on MNC internationalization could examine the role of language policy on firm outcomes, for example investigating how policies to use English as the corporate language affect firm growth and international expansion.…”

The causal effect of trade on migration: Evidence from countries of the Euro-Mediterranean partnership

“…The problem of all these papers is that they look at simple correlations and not at causal effects. As mentioned by Gen et al (2011), just a few papers try to tackle the problem of endogeneity, focussing on the effect of migration on trade, rather than on the effect of trade on migration. Furthermore the identification strategy of these papers is not very convincing, as they use the lags of migration as a instrument for migration under the assumption that past migrant flows are based on historical networks and 'well-trodden paths' rather than current economic conditions.…”

“…Furthermore the gravity model has a rather high explanatory power, which makes it an attractive specification to test the marginal influence of additional explanatory variables, such as language similarity, colonial ties, exchange rates, contiguity and trade agreements (Gen et al, 2011). The amount of migration between two countries is likely to increase in the economic size of the countries (measured by their GDP) and decreasing in the cost of transportation between them (measured by geographical distance).…”