International Trade and Labor Market Integration of Immigrants

IFN Working Paper No. 1343, 2020

46 Pages Posted: 15 Oct 2020

See all articles by Magnus Lodefalk

Magnus Lodefalk

Örebro University; Ratio; Global Labor Organization (GLO)

Fredrik Sjöholm

Lund University School of Economics and Management; Research Institute of Industrial Economics (IFN)

Aili Tang

Örebro University

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

Lodefalk, Magnus and Sjöholm, Fredrik and Tang, Aili, International Trade and Labor Market Integration of Immigrants (August 26, 2020). IFN Working Paper No. 1343, 2020, Available at SSRN: https://ssrn.com/abstract=3681396 or http://dx.doi.org/10.2139/ssrn.3681396

Magnus Lodefalk

Örebro University ( email )

Örebro, SE-701 82
Sweden

Ratio ( email )

P.O. Box 3203
SE-103 64 Stockholm
Sweden

Global Labor Organization (GLO) ( email )

Collogne
Germany

Fredrik Sjöholm (Contact Author)

Lund University School of Economics and Management ( email )

P.O Box 7080
Lund
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Aili Tang

Örebro University ( email )

Fakultetsgatan 1
SE-701 82
Örebro, 70210
Sweden

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