Review of World Economics

, Volume 150, Issue 3, pp 557–594 | Cite as

On the pro-trade effects of immigrants

  • Massimiliano Bratti
  • Luca De Benedictis
  • Gianluca Santoni
Original Paper

Abstract

This paper investigates the causal effect of immigration on trade flows using Italian panel data at the province level. We exploit the exceptional characteristics of the Italian data (the fine geographical disaggregation, the very high number of countries of origin of immigrants, the high heterogeneity of social and economic characteristics of Italian provinces, and the absence of cultural or historical ties with the countries where immigrants come from) coupled with the use of a wide set of fixed effects and an ‘instrument’ based on immigrants’ enclaves. We find that immigrants have a significant positive effect on both exports and imports, but 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). Moreover, while our data show inter-ethnic spillovers for exports, we find no evidence that networks between different ethnicities affect provinces’ imports. Finally, we provide 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 least advanced provinces (Southern Italy).

Keywords

Immigration Trade Gravity model Transplanted home bias effect Business and social networks effects 

JEL Classification

F10 F14 F22 R10 

Supplementary material

10290_2014_191_MOESM1_ESM.pdf (207 kb)
Supplementary material 1 (207 KB)
10290_2014_191_MOESM2_ESM.pdf (1.9 mb)
Supplementary material 1 (1,944 KB)

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Copyright information

© Kiel Institute 2014

Authors and Affiliations

  • Massimiliano Bratti
    • 1
  • Luca De Benedictis
    • 2
  • Gianluca Santoni
    • 3
  1. 1.DEMMUniversità degli Studi di MilanoMilanItaly
  2. 2.DEDUniversità degli Studi di MacerataMacerataItaly
  3. 3.IEScuola Superiore Sant’AnnaPisaItaly

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