On the Pro-Trade Effects of Immigrants
44 Pages Posted: 14 Feb 2013
Date Written: November 1, 2012
In this paper we investigate the causal effect of immigration on tradeflows. We exploit the very favorable set-up offered by the Italian panel data — the fine geographical disaggregation (provinces, i.e., Nomenclature of territorial units for statistics 3 level l — NUTS-3), the very high number of countries of origin of immigrants (‘super-diversity’), the high heterogeneity of social and economic characteristics of Italian provinces, and the absence of cultural (e.g. language) or historical (colonial ties) attractors for immigration — to deal with the possible distortions generated by the choice of the areal unit (the so-called Modifiable Areal Unit Problem — MAUP), comparing estimates at the NUTS-2 and NUTS-3 geographical level; with unobserved heterogeneity, controlling for a wide set of fixed effects; with the endogeneity of immigrants’ location choices, using instruments based on immigrants’ enclaves. We find 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.
Keywords: Immigration, Trade, Gravity model, Super-diversity, MAUP, Transplanted-home bias eﬀect
JEL Classification: F10, F14, F22, R10
Suggested Citation: Suggested Citation