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International Trade and Labor Market Integration of Immigrants

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  • Lodefalk, Magnus

    (Örebro University)

  • Sjöholm, Fredrik

    (Research Institute of Industrial Economics (IFN))

  • Tang, Aili

    (Örebro University)

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.

Suggested Citation

  • Lodefalk, Magnus & Sjöholm, Fredrik & Tang, Aili, 2020. "International Trade and Labor Market Integration of Immigrants," Working Paper Series 1343, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1343
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    More about this item

    Keywords

    Export; Import; Immigrants; Employment; Wages;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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