Isolating the Network Effect of Immigrants on Trade

22 Pages Posted: 11 Mar 2014

See all articles by Mariya Aleksynska

Mariya Aleksynska

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

Giovanni Peri

University of California, Davis - Department of Economics

Date Written: March 2014

Abstract

Within the migration–trade nexus literature, this paper proposes a more carefully defined measure of migration business networks and quantifies its impact on bilateral trade. Using cross‐sectional data and controlling for the overall bilateral stock of migrants, the share of migrants employed in managerial/business‐related occupations has a strong additional effect on trade. Those immigrants should be the ones directly involved in the diffusion and transmission of information relevant for companies trading with other countries. Their presence is found to increase the volume of trade, especially of imports, beyond the already known effect of immigrants or highly educated immigrants. When we control for the presence of highly educated immigrants, the share of immigrants in business network occupations shows a particularly large effect on trade in differentiated goods. We also find that highly educated individuals in business‐related occupations are those contributing to stimulate import and export by the largest margin. Business network effects seem particularly important in stimulating exports to culturally different countries, such as those with different language and legal origin.

Suggested Citation

Aleksynska, Mariya and Peri, Giovanni, Isolating the Network Effect of Immigrants on Trade (March 2014). The World Economy, Vol. 37, Issue 3, pp. 434-455, 2014. Available at SSRN: https://ssrn.com/abstract=2407235 or http://dx.doi.org/10.1111/twec.12079

Mariya Aleksynska

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

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

Giovanni Peri

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

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