We are grateful to the participants of the conference Global Migration: Economics, Politics, Policy on March 11–12, 2011, at the Murphy Institute of Tulane University, New Orleans.
Version of Record online: 17 FEB 2012
© 2012 Blackwell Publishing Ltd
The World Economy
Special Issue: EUROPEAN SPECIAL ISSUE: IMMIGRATION
Volume 35, Issue 2, pages 216–241, February 2012
How to Cite
Egger, P. H., von Ehrlich, M. and Nelson, D. R. (2012), Migration and Trade. World Economy, 35: 216–241. doi: 10.1111/j.1467-9701.2011.01429.x
- Issue online: 17 FEB 2012
- Version of Record online: 17 FEB 2012
Theoretical and empirical research in economics suggests that bilateral migration triggers bilateral trade through a number of channels. This paper assesses the functional form of the impact of migration on trade flows in a quasi-experimental setting. We provide evidence that the relationship is not log-linear. In particular, at small levels of immigration (stocks) the elasticity of trade to migration is quite high, and it declines to zero at about 4,000 immigrants. If immigration stocks exceed such a level, the evidence suggests that trade will not increase anymore. This suggests that for cross-country network and other effects flowing from immigration to materialise at a significant level for trade, a high-enough level of immigrant stocks is necessary. But there appears to be satiation as immigrant numbers increase.