Scandinavian Working Papers in Economics

Working Papers,
Örebro University, School of Business

No 2020:7: International Trade and Labor Market - Integration of Immigrants

Magnus Lodefalk (), Fredrik Sjöholm () and Aili Tang ()
Additional contact information
Magnus Lodefalk: Örebro University School of Business, Postal: Örebro University, School of Business, SE - 701 82 ÖREBRO, Sweden
Fredrik Sjöholm: Lund University, Postal: Lund University, Department of Economics, Tycho Brahes väg 1, 223 63 Lund
Aili Tang: Örebro University School of Business, Postal: Örebro University, School of Business, SE - 701 82 ÖREBRO, Sweden

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.

Keywords: Export; Import; Immigrants; Employment; Wages

JEL-codes: F16; F22; J21; J31; J61

44 pages, August 13, 2020

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