Working Paper: CEPR ID: DP9053
Authors: Peter Egger; Doug R. Nelson; Maximilian von Ehrlich
Abstract: In this paper, we assess the role of skilled versus unskilled migration for bilateral trade using a flexible reduced-form model where the stocks of skilled and unskilled migrants at the country-pair level are determined as endogenous continuous treatments. The impact of different levels of skilled and unskilled migration on the volume and structure of bilateral trade is identified in a quasi-experimental design. This is accomplished through a generalization of propensity score estimation procedures for a case of multivariate, multi-valued treatments whereof the bivariate continuous treatment model is a special case. We find evidence of a polarized impact of skill-specific migration on trade: highly concentrated skilled or unskilled migrants induce higher trade volumes than a balanced composition of the immigrant base. Regarding the structure of trade, we observe a polarization specifically for differentiated goods and for north-south trade. Both bits of evidence are consistent with a segregation of skill-specific immigrant networks and corresponding consumption patterns and effects on trade.
Keywords: bilateral trade; generalized propensity score estimation; quasi-randomized experiments; skilled vs unskilled immigration
JEL Codes: C14; C21; F14; F22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| skilled migration (J61) | bilateral trade volumes (F10) |
| unskilled migration (J61) | bilateral trade volumes (F10) |
| polarized migrant groups (F22) | bilateral trade volumes (F10) |
| segregated skill-specific immigrant networks (J61) | consumption patterns (D10) |
| consumption patterns (D10) | trade dynamics (F14) |
| composition of migrants (F22) | marginal effects of skilled and unskilled migration (F22) |