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Do foreign workers reduce trade barriers? Microeconomic evidence

Andrews, Martyn; Schank, Thorsten; Upward, Richard

Authors

Martyn Andrews martyn.andrews@manchester.ac.uk

Thorsten Schank schank@uni-mainz.de

Richard Upward richard.upward@nottingham.ac.uk



Abstract

This paper provides evidence that foreign workers reduce firms' trade costs and thus increase the probability that firms export. This informs both the literature on trade costs and the microeconomic literature on firms' export behaviour. We identify the nationality of each worker in a large sample of German establishments, and relate this to the exporting behaviour of these establishments. We allow for the possible endogeneity of an establishment's workforce by instrumenting the share of foreign workers with the regional distribution of foreign workers in the wider labour market. We find a significant effect of worker nationality on exporting which is not driven by the industrial, occupational or locational concentration of migrants. The effect is much stronger for senior occupations, who are more likely to have a role in exporting decisions by the establishment. The relationship is also stronger when we consider exports to particular regions and workers from these regions, consistent with a gravity model in which trade flows from country i to j are a function of migrants from j in i.

Journal Article Type Article
Publication Date Sep 11, 2017
Journal The World Economy
Print ISSN 0378-5920
Electronic ISSN 1467-9701
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 40
Issue 9
APA6 Citation Andrews, M., Schank, T., & Upward, R. (2017). Do foreign workers reduce trade barriers? Microeconomic evidence. World Economy, 40(9), doi:10.1111/twec.12486
DOI https://doi.org/10.1111/twec.12486
Keywords International migration; Trade barriers; Exports; Employer-employee data; Firm-level analysis
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/twec.12486/full
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the peer reviewed version of the following article: Andrews M, Schank T, Upward R. Do foreign workers reduce trade barriers? Microeconomic evidence. World Econ. 2017;40:1750–1774. https://doi.org/10.1111/twec.12486 which has been published in final form at http://onlinelibrary.wi...10.1111/twec.12486/full This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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