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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 11-16:
Does Immigrant Employment Matter for Exports? Evidence From Denmark

Sanne Hiller ()

Abstract: Immigration impacts the economy in ample ways: it affects growth, wages and total factor productivity. This study deals with the effects of immigration on firm exports. Can firms benefit from hiring immigrants to expand their export sales? Or do immigrants who live in the firm’s region affect trade? In contrast to the existing literature, we are able to distinguish these two distinct channels. Using matched employer-employee data from Denmark for the years 1995 - 2005, we provide novel insight in the nexus between exports and immigration. We further contribute to the literature by providing first evidence on the adjustment of firms’ product portfolio in response to immigration. Our results show that firms can reap the benefits from immigration only through hiring foreigners. This implies that the trade-cost reducing intercultural knowledge embedded in foreign expatriates can only be accessed via employment. Thus, to tap the full potential of foreign labor movements for international trade, political efforts should be targeted towards labor market integration of immigrants.

Keywords: International Trade; Migration; Firm-level analysis; Matched Employer-Employee Data; (follow links to similar papers)

JEL-Codes: F10; F22; (follow links to similar papers)

25 pages, December 1, 2011

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