Immigration, Trade and Product Differentiation

Abstract

Immigrant-trade links are examined with an emphasis placed on variation across product types and home country income classifications. Data for the US and 70 trading partners spanning the 1980-1997 period are employed. We find the immigrant-trade relationship varies based on degree of product differentiation and by home country per-capita income. In response to a hypothetical 10 percent increase in the immigrant stock variable, US imports of differentiated goods from high income countries increase by approximately 2 percent. A like increase in the immigrant stock from low income countries increases US differentiated goods imports by 4.25 percent, while exports of homogenous goods increase by 2.5 to 4.3 percent. Imports of homogenous goods from high income nations and exports of all product types to these nations appear unaffected by immigrant stock levels.

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