Magnus Lodefalk (), Fredrik Sjöholm () and Aili Tang
Magnus Lodefalk: Örebro University, Postal: Global Labor Organization, and Ratio Institute
Fredrik Sjöholm: Research Institute of Industrial Economics (IFN), Postal: Box 55665, SE-102 15 Stockholm, Sweden
Aili Tang: Örebro University, Postal: and Ratio Institute
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.
45 pages, June 17, 2020
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