Revisiting the Trade-Migration Nexus: Evidence from New OECD Data

27 Pages Posted: 12 Jun 2008

See all articles by Gabriel J. Felbermayr

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim

Farid Toubal

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Date Written: March 1, 2008

Abstract

International migrants contribute to bilateral trade creation if their presence reduces trade costs or entails additional demand for goods from their source countries. However, only the trade-cost channel matters for beneficial welfare gains from migration. Using new data on stocks of foreign-born individuals by skill class, we try to separately quantify those two channels. We assume that improved information affects host countries' imports and exports symmetrically, while the preference channel matters for imports only. For differentiated goods, both channels contribute evenly towards the total trade-creating effect of migration. Hence, looking at the total trade-creating effect of migration substantially overestimates the welfare gains. In line with expectations, the trade cost channel - and hence the efficiency effect - is largest with differentiated goods and for high-skilled migrants.

Keywords: Migration, International Trade, Gravity Equation

JEL Classification: F12, F22, Z13

Suggested Citation

Felbermayr, Gabriel J. and Toubal, Farid, Revisiting the Trade-Migration Nexus: Evidence from New OECD Data (March 1, 2008). Available at SSRN: https://ssrn.com/abstract=1144063 or http://dx.doi.org/10.2139/ssrn.1144063

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim ( email )

Keplerstra├če 17
D-70174 Stuttgart
Germany

Farid Toubal (Contact Author)

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management ( email )

France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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