Immigration and International Financial Flows
47 Pages Posted: 6 Mar 2007
Date Written: September 2003
Abstract
Capital and labor are the primary components of country growth models. Little, however, is known about the empirical transitional dynamics and interdependency between capital flows and immigration flows. Are they substitutes or complements? Do they move contemporaneously across borders, or is there a lead-lag relationship? This paper attempts to empirically answer these questions. We find, surprisingly, that labor not only moves in the same direction as capital, but it also leads capital. This relation is stronger for foreign direct investment flows than for international portfolio flows. Results are consistent for various countries, periods and migration flow specifications. Thus the paper suggests that an important predictive variable for international capital flows is immigration flows. The primary contribution of this research is therefore to introduce immigration in the subject of international finance.
Keywords: capital flows, labor/migration flows, causality
JEL Classification: F2, F3
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Why is There a Home Bias? An Analysis of Foreign Portfolio Equity Ownership in Japan
By Jun-koo Kang and René M. Stulz
-
By Gur Huberman
-
Home Bias and the High Turnover
By Linda L. Tesar and Ingrid M. Werner
-
The Determinants of Cross-Border Equity Flows
By Richard Portes and Hélène Rey
-
Corporate Governance and the Home Bias
By Lee Pinkowitz, Rohan Williamson, ...
-
The Determinants of Cross-Border Equity Flows
By Richard Portes and Hélène Rey
-
The Portfolio Flows of International Investors, I
By Kenneth Froot, Paul G.j. O'connell, ...
-
The Information Content of International Portfolio Flows
By Kenneth Froot and Tarun Ramadorai
-
The Information Content of International Portfolio Flows
By Kenneth Froot and Tarun Ramadorai