Migration, Trade and Spillover Effects – Journal of Comparative Economics – article

Migration, Trade and Spillover Effects

Erik Figueiredo, Luiz Renato Lima, Gianluca Orefice | Journal of Comparative Economics

2019-11-19

This paper identifies a new channel through which migrants can affect the import demand of goods in the host country. In migrating from origin to destination country, migrants observe a change in the price of the bundle of consumable goods. In particular, the migration decision can imply a reduction in the price of imported goods for the consumption bundle of migrants: emigration towards less (tariff) protected countries allows the consumption of products that were prohibitively protected in the origin countries of migrants. To test this channel we estimate the import demand effect of migrant groups coming from third high (tariff) protected countries. Our empirical results strongly confirm this channel and suggest a new perspective about how migration can affect welfare and trade in destination countries.

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