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Migration and Cross-Border Financial Flows

Author

Listed:
  • Maurice Kugler

    (IDC - Interdisciplinary Center Herzliya)

  • Oren Levintal

    (Bar-Ilan University [Israël])

  • Hillel Rapoport

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

The gravity model has provided a tractable empirical framework to account for bilateral flows not only of manufactured goods, as in the case of merchandise trade, but also of financial flows. In particular, recent literature has emphasized the role of information costs in preventing larger diversification of financial investments. This paper investigates the role of migration in alleviating information imperfections between home and host countries. We show that the impact of migration on financial flows is strongest where information problems are more acute (that is, for more informational sensitive investments, between culturally more distant countries, and when the source country of migrants is a developing country) and for the type of migrants that are most able to enhance the flow of information on their home country, namely, skilled migrants. We interpret these differential effects as additional evidence pointing to the role of information in generating home-bias and as new evidence of the role of migration in reducing information frictions between countries.

Suggested Citation

  • Maurice Kugler & Oren Levintal & Hillel Rapoport, 2015. "Migration and Cross-Border Financial Flows," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01134465, HAL.
    • Handle: RePEc:hal:cesptp:halshs-01134465
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01134465
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    Cited by:

    1. Miguelez, Ernest & Noumedem Temgoua, Claudia, 2020. "Inventor migration and knowledge flows: A two-way communication channel?," Research Policy, Elsevier, vol. 49(9).
    2. Dany Bahar, 2020. "Diasporas and Economic Development: A Review of the Evidence and Policy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(2), pages 200-214, June.
    3. Ernest Miguélez, 2018. "Inventor Diasporas and the Internationalization of Technology," The World Bank Economic Review, World Bank, vol. 32(1), pages 41-63.
    4. Hillel Rapoport, 2016. "Migration and globalization: what’s in it for developing countries?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 37(7), pages 1209-1226, October.
    5. Hillel Rapoport, 2018. "Diaspora externalities: A view from the South," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    6. Anna Minasyan & Peter Nunnenkamp, 2016. "Remittances and the Effectiveness of Foreign Aid," Review of Development Economics, Wiley Blackwell, vol. 20(3), pages 681-701, August.
    7. Diego Useche & Ernest Miguelez & Francesco Lissoni, 2020. "Highly skilled and well connected: Migrant inventors in cross-border M&As," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(5), pages 737-763, July.
    8. Gianluca Orefice & Hillel Rapoport & Gianluca Santoni, 2021. "How Do Immigrants Promote Exports?," Working Papers 2021-06, CEPII research center.
    9. Etzo, Ivan & Takaoka, Sumiko, 2016. "The impact of migrants on the cross-border M&A: Some evidence for Japan," MPRA Paper 71558, University Library of Munich, Germany.
    10. Matthias Lücke & Tobias Stöhr, 2018. "Heterogeneous immigrants, exports and foreign direct investment: The role of language skills," The World Economy, Wiley Blackwell, vol. 41(6), pages 1529-1548, June.
    11. Lücke, Matthias & Stöhr, Tobias, 2015. "Heterogeneous immigrants and foreign direct investment: The role of language skills," Kiel Working Papers 2009, Kiel Institute for the World Economy (IfW Kiel).
    12. Volker Grossmann, 2021. "How immigration affects investment and productivity in host and home countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 292-292, October.
    13. Masood Gheasi & Peter Nijkamp, 2017. "A Brief Overview of International Migration Motives and Impacts, with Specific Reference to FDI," Economies, MDPI, vol. 5(3), pages 1-11, August.
    14. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr & Arthur Sweetman, 2020. "An introduction to the economics of immigration in OECD countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1365-1403, November.
    15. Ding, Haoyuan & Fan, Haichao & Jin, Yuying & Qi, Tong, 2022. "Talented overseas returnees and outward foreign direct investment," European Economic Review, Elsevier, vol. 148(C).
    16. Eric Rougier & Nicolas Yol, 2018. "The volatility effect of diaspora’s location: A migration portfolio approach," Cahiers du GREThA (2007-2019) 2018-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    17. Donaubauer, Julian & Glas, Alexander & Nunnenkamp, Peter, 2015. "Infrastructure and trade: A gravity analysis for major trade categories using a new index of infrastructure," Kiel Working Papers 2016, Kiel Institute for the World Economy (IfW Kiel).
    18. Dany Bahar, 0. "Diasporas and Economic Development: A Review of the Evidence and Policy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 0, pages 1-15.
    19. Hillel Rapoport, 2018. "Diaspora externalities: A view from the South," WIDER Working Paper Series wp-2018-25, World Institute for Development Economic Research (UNU-WIDER).
    20. Ademmer, Esther & Barsbai, Toman & Lücke, Matthias & Stöhr, Tobias, 2015. "30 Years of Schengen: Internal blessing, external curse?," Kiel Policy Brief 88, Kiel Institute for the World Economy (IfW Kiel).
    21. Diego Useche & Ernest Miguelez & Francesco Lissoni, 2019. "Highly skilled and well connected: Migrant inventors in cross-border M&As," Post-Print halshs-02024499, HAL.

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    More about this item

    Keywords

    gravity models; information asymmetries; international loans; international financial flows; Migration;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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