Migration, trade and income

Arbeitspapier

This paper explores the relationship between openness to trade, immigration, and income per person across countries. To address endogeneity concerns we extend the instrumental-variables strategy introduced by Frankel and Romer (1999). We build predictors of openness to immigration and to trade for each country by using information on bilateral geographical and cultural distance (while controlling for country size). Since geography may affect income through other channels, we also control for climate, disease environment, natural resources, and colonial origins. Most importantly, we also account for the roles of institutions and early development. Our instrumental-variables estimates provide evidence of a robust, positive effect of openness to immigration on long-run income per capita. In contrast, we are unable to establish an effect of trade openness on income. We also show that the effect of migration operates through an increase in total factor productivity, which appears to reflect increased diversity in productive skills and, to some extent, a higher rate of innovation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7325

Classification and Topics

• Classification: Wirtschaft ; International Migration ; Aggregate Factor Income Distribution ; Geographic Labor Mobility; Immigrant Workers
• Subject: international migration ; trade ; income per person ; productivity ; geography ; institutions ; diversity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ortega, Francesc ; Peri, Giovanni
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/71613
• Last update: 10.03.2025, 11:42 AM CET