International Trade and Labor Market Integration of Immigrants
IFN Working Paper No. 1343, 2020
46 Pages Posted: 15 Oct 2020
Date Written: August 26, 2020
Abstract
We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages.
Keywords: Export, Import, Immigrants, Employment, Wages
JEL Classification: F16, F22, J21, J31, J61
Suggested Citation: Suggested Citation