Bridging Trade Theory and Labour Econometrics

doi: 10.1111/j.1467-6419.2011.00696.
BRIDGING TRADE THEORY AND LABOUR

ECONOMETRICS: THE EFFECTS OF
INTERNATIONAL MIGRATION
Noel Gaston
Bond University
Douglas R. Nelson
Tulane University
University of Nottingham
Abstract. This paper surveys current theoretical and empirical research on international migration
with a particular emphasis on the links between trade theory and labour empirics.
Keywords. International migration; International trade
1. Introduction
Migration is not a recent phenomenon: people have always migrated in search of food, shelter and
fortune (e.g. the gold rushes in California, Victoria, etc.). They have left the mother country for the
colonies; have fled their countries during war-time, times of persecution, famine and political chaos.
Historically, much migration was involuntary: African slaves who were transported to the USA, convicts
transported to Australian penal colonies and bonded labour was transported to East Africa and other
places. Most modern day migration is voluntary and is driven by the search for a better life.
Like immigration itself, economic research on migration seems to come in waves. The large scale
of current global migration, and the sometimes quite ugly politics associated with that migration, has
produced just such a wave of research. In the economics discipline, the study of immigration falls
between trade and labour economics, with sizable bodies of both theoretical and econometric work.1
To limit the field of coverage, we will focus on a set of questions framed by standard trade theoretic
models and the empirical research that bears on those questions.
We begin the paper with a very brief reminder of the basic trade theoretic framework, which
embeds the theoretical framework taken by most labour economists working on the migration issues.
This section reminds us that for most theoretical analysis, migration is seen as straightforward factor
arbitrage. That is, there is no essential difference between labour and capital. Using this as a framework,
Section 2 turns to recent empirical work on the links between immigration and wages, and between
immigration and output. Where these are essentially single economy issues, Section 3 looks at issues
that require a fundamentally global perspective: the links between migration and trade patterns
running through standard endowment-based arguments, the empirical issue of whether immigration
This
paper represents part of a larger project conducted by the authors on International Migration. Another part is
forthcoming as Gaston and Nelson (2011). Unlike that particular paper, this papers primary focus is on surveying
theoretical and empirical work on the link between migration and trade.
Journal of Economic Surveys (2013) Vol. 27, No. 1, pp. 98139

C 2011 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden,
MA 02148, USA.
BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS
99
and trade are complements or substitutes and the role of networks in underwriting the immigrationtrade relationship. Part of the interest in the role of networks is that the underlying theory fundamentally
treats labour mobility as social, rather than purely economic. Section 4 takes up the closely related
issues of welfare and political economy analysis. Section 5 concludes.
2. The Basic Trade Framework

Most trade theoretic research on immigration begins by abstracting from both preference heterogeneity
and technology heterogeneity to focus on endowment heterogeneity. Then, migration is simply a transfer
of some factors of production from one country to another. When discussing migration, these factors
will be called labour; but in these models there is nothing in particular to distinguish different sorts of
labour from one another, or to distinguish labour as a class from other types of factors of production.
For most trade economists, the 2-factor 2-good model of general competitive equilibrium, with the
HeckscherOhlinSamuelson (HOS) assumptions, is the first stop for developing intuition on real (as
opposed to monetary) international questions. In the HOS model, as long as both goods are produced,
factor endowments do not enter into the determination of relative factor prices. Leamer (1995) calls
this important result the factor price insensitivity theorem (FPI). This is the one-country version of
the more well known, but empirically more dubious, factor price equalization theorem (FPE). Instead
of adjustment in relative factor prices, adjustment to an immigration shock occurs on the output
margin, with the labour-intensive sector expanding and the other sector contracting. The mechanism
of adjustment is captured by the other key theorem from trade theory for the study of immigration
the Rybczynski theorem (Rybczynski, 1955). This theorem states that, under the assumptions of the
HOS model, and holding world prices fixed, an increase in the endowment of one (of two) factors of
production, holding the other constant, results in an increase in the output of the commodity whose
production uses that factor intensively and a fall in the output of the other commodity, with both
changes in output being proportionately greater than the endowment change.
The m-factor 1-good model is the most common framework applied by labour economists working
on estimating the effects of immigration, as well as the basis of the two-country model widely used for
discussion of international equilibrium with migration. For this model, the commodity is interpreted as
gross domestic product. Here the relative endowments enter into the determination of relative factor
prices. This is most transparent in the two-factor case. If a country permits an increase in the stock
of the mobile factor, say by increasing the immigration quota, it is easy to see that the consequent
change in relative factor supplies means that all units of the mobile factor previously resident in the
country experience reduced returns, whereas all units of the internationally immobile factor experience
increased returns.
In the general case, m factors are used to produce n final goods. When m n, endowment change
has no effect on factor prices. If m > n, FPI will not generally hold and immigration will reduce wages
which, of course, is what our intuition tells us should be the effect of immigration on wages. Note,
however, that it depends on the prima facie least plausible assumption about the relative dimensionality
of endowments versus produced commodities. Where FPI is robust to the empirically plausible case
of m < n, the Rybczynski theorem is problematic because the production structure is indeterminate
(before and after the endowment change).
It bears repeating that the sole relevant difference between the basic frameworks in use by labour and
trade economists is dimensionality. Dimensionality is not nearly so damaging of FPI as it is of FPE.
However, it seems that, on any but fairly short-term interpretations of the concepts of commodity and
factor, there are massively more commodities than factors and in this case the logic of FPI holds quite
straightforwardly. Note that we are not arguing that FPI actually obtains, but that, for the parameters
that are commonly agreed in the basic labour and trade theoretic traditions, m n seems a more

C 2011 Blackwell Publishing Ltd
100
GASTON AND NELSON
plausible assumption, from which FPI follows. We should generally expect adjustment at the outputmix margin to play a considerable role in responding to factor immigration. If the mechanism breaks
down, it must be as a result of deviations from those elements of the basic model that are shared
between trade and labour economists and not on dimensionality.
3. Empirical Results Based on Standard Models

The preceding section considered two main comparative static questions: the effect of endowment
changes on output (Rybczynski); and the effect of endowment changes on factor prices (FPI). The
second question has attracted by far the majority of systematic research with specific reference
to the migration of labour. The methodology and findings in this empirical literature have been
comprehensively surveyed elsewhere (Gaston and Nelson, 2002; Longhi et al., 2005; Dustmann et al.,
2008; Okkerse, 2008); therefore in this section, we briefly discuss some of the more recent literature
and, due to its fundamental importance to the contemporary economic debate, the largely unresolved
debate between David Card, Gianmarco Ottaviano and Giovanni Peri who argue for small measured
labour effects of immigration and George Borjas who has produced the largest adverse labour market
effects attributable to immigration.
There has been also some research seeking to estimate Rybczynski effects. Although most of this
research does not specifically consider migration, because the causal factors are so closely related,
following a review of the literature on labour market effects of immigration, this section turns to a
brief discussion of empirical research on the Rybczynski theorem.
3.1 Empirics of Immigration and Wages Circa 2011

Much of the contemporary empirical labour research on immigration was stimulated by the rising wage
inequality between more skilled and less skilled workers experienced in many developed economies
during the 1980s. Much of the early work by labour economists on trade and wages treated trade as
implicit migration. Although trade economists have long looked at trade as implicit trade in factors,
the underlying general equilibrium framework predisposed them to expect no labour market effects
unless there was either a change in international prices or a change in the structure of production. The
lack of sizable empirical labour market effects provided an interesting way in to these issues for trade
economists.
Although subject to varying interpretations, the finding of negligible host labour market effects of
immigration has also been remarkably robust for the regression-based and natural experimental studies
(Gaston and Nelson, 2002; Dustmann et al., 2008; Okkerse, 2008). One would expect that in the face of
such a huge mountain of evidence that this would be the end of the story. Of course, even the briefest
excursion through the recent literature reveals that the debate is far from having run its course. The
attention of those intent on identifying large native labour market impacts of immigration has turned
to explaining what the small statistical effect really means. One potential problem is the possibility
that immigrants locate to areas where jobs are expanding anyway. Given the continuing significance
of a small number of immigrant gateway cities (consistent with the major role played by networks
in channelling immigration), it is not surprising that there is little evidence supporting this conjecture
(Bartel, 1989; Bartel and Koch, 1991; Frey and Liaw, 1998; Gurak and Kritz, 2000).
A potentially more serious problem is that the internal migration by natives offsets the increased
supply of immigrants. Consider the case of the Mariel boatlift studied by Card (1990): natives that
were considering moving to Miami might now foresee lower wages as a result of the increased labour
force (or even decide to avoid Miami for racist or other social reasons); they will now try to identify a
similar city as their new migration target; but those cities are likely to be precisely the cities used by
Card as ideal untreated units (i.e. similar on all dimensions to Miami, but not receiving the immigrant

101
shock). The new native immigrants to those cities will have a similar effect on the labour markets there
to the effect of the Marielitos on the Miami labour market, thus biasing the analysis towards a finding
of no effect. Card (2001) (see also Kritz and Gurak, 2001) and Card and DiNardo (2000) find no
evidence of selective out-migration by natives in response to immigrant inflows at particular locations.
Although Cortes (2008) finds evidence of some offsetting native migration in her study of the effect
of immigration on prices of non-traded goods and services in local markets, she concludes that this
effect is not sufficient to arbitrage away the effect of migrants on prices. Furthermore, it remains a
puzzle that regional economies should adjust so quickly to immigrant shocks, but so slowly to most
other shocks studied by regional and labour economists.
One possibility, suggested by FPI, is that adjustment occurs on the output margin rather than on
the wage margin. That is, the composition of output may change in response to an endowment shock,
in such a way that factor prices are unchanged. The evidence on this is mixed: as we discuss in the
next section, there is evidence of the sorts of Rybczynski effects needed to support this adjustment
mechanism, as well as some (weak) direct evidence directly related to immigration shocks. For example,
Hanson and Slaughter (2002) document the rapid growth in apparel, textiles, food products and other
labour-intensive industries in California after the arrival of Mexican migrants. They focus on statespecific endowment shocks and state-specific wage responses. They show that the state output-mix
changes broadly match state endowment changes and that variation in state unit factor requirements
is consistent with FPE across states. Card (2010) also examines adjustment on the output margin,
finding evidence of moderate effects. It certainly appears that states absorb regional endowment shocks
through mechanisms other than changes in regional relative factor price changes. Other work suggests
that technological change, either exogenous (Gandal et al., 2004) or endogenous (Lewis, 2005, 2008;
Card and Lewis, 2007), is a more likely candidate than Rybczynski effects.
The earlier labour empirical approaches primarily identified labour market effects from variance
across regions. We have just noted that internal migration of natives, and even of earlier waves of
migrants, could interfere with inference in analyses based on local labour market data. As a response
to this potential problem, George Borjas (Borjas et al., 1992, 1997; Borjas, 2003, 2006) argues that
analysis of the effect of migration on labour markets should proceed at the level of the national
economy. As with research based on spatial correlations, there are both regression- and productionfunction-based variants using the skill cell approach. The standard reference in both cases is Borjas
(2003) (see also Borjas and Katz, 2007).
The first step in applying this approach is to construct the skill cells. Because the goal is to exploit
variance in immigrant presence across skill cells to identify the effect of immigration on wages, the
key here is to aggregate up from individual data to skill cells such that individuals in a given cell are
perfect substitutes for one another and individuals in different cells are imperfect substitutes. Borjas
aggregates on age cohort (experience) and education. That is, he assumes that workers whether native
or immigrant with the same level of schooling and experience are perfect substitutes, but that workers
with the same level of schooling, but different experience are imperfect substitutes (similarly for same
experience but different schooling). For this strategy to work, we must be confident that the definitions
of the cells are such that workers in different cells really are imperfect substitutes and that workers in
the same cell really are perfect substitutes.
For his analysis, Borjas works with four education groups (high school dropouts, high school grads,
some college, college grads) and eight labour market experience groups (five year bands for workers
with 140 years of experience), for a total of 32 ageexperience cells. Because he uses data from
five US censuses t = (1960, 1970, 1980, 1990, 2000), it results in a data set with 160 observations
on male workers. For each of these cells, the share of immigrants in total workers in a given cell
is pi jt = Mi jt /z i jt . Using these data, Borjas regresses various labour market outcomes (log annual
earnings, log weekly earnings, fraction of time worked) on education, experience and time fixed
effects, as well as their interactions. This structure involves identifying the effects of immigration from

102
GASTON AND NELSON
variance within educationexperience cells over time. Borjas calculates the elasticity of the wage with
respect to the ratio of immigrants to natives in a given cell. For his basic specification, this elasticity
is 0.40; i.e. an increase of immigrants in cell ijt by 10% is estimated to cause a 4% fall in weekly
earnings. The effect on annual earnings is estimated to be 6.4% and on labour supply 3.7%. As
Borjas notes, these estimates are high compared to previous estimates found in non-immigration studies
and far higher than in other immigration studies.
In addition to the reduced form approach, Borjas also considers a more structural approach based
on estimation of a production functions defined on labour defined in skillexperience terms. Unlike
the production function approach based on spatial variation and a limited set of labour types (often
just [native, immigrant]), Borjas has a large number of schooling/experience types and a relatively
small number of annual observations, so he requires a technology that has a relatively small number of
parameters that must be estimated. For this purpose, he uses a nested constant elasticity of substitution
(CES) function. Specifically, Borjas assumes a top-level aggregator that produces GDP as a function
of capital and labour
1

Yt = K t K t + Lt L t / ,
< =
K L 1
1,
K L
K t + Lt = 1
(1)
Aggregate labour at time t (Lt ) is itself a CES aggregate of workers with varying schooling and
labour market experience. This is constructed by first aggregating workers with differing experience, but
the same level of education into an education-based aggregate (Lit ); and then aggregating those lower
level aggregates across education groups into aggregate labour (Lt ). Thus, the input to the top-level
aggregator is

Lt =
it L it
1/
< =
iI
E 1
1,
E
it = 1
(2)
iI
where E is the elasticity of substitution between the education aggregates. The lowest level aggregator
combines workers with different levels of experience into iso-education level aggregates
1/
i j L i jt ,
L it =
< =
jJ
X 1
1,
X
i j = 1
(3)
jJ
where X is the elasticity of substitution between experience classes within an education group.
Using the condition that the wage equals the marginal product for skill group ijt (taking the sole
good, GDP, as numeraire), the wage is given by
ln wi jt = ln Lt + (1 ) ln Yt + ( ) ln L t + ln it + ( ) ln L it
+ ln i j + ( 1) L i jt
(4)
Borjas uses fixed effects to recover the relevant elasticities. From equation (3), the estimates of ij
and can be used to calculate the Lit . Borjas uses education group-specific time trends to approximate
the it and the number of immigrants in each skill group as an instrument for the size of each skill
group. Borjas then applies the same methods as those applied in analysing production functions using
regional data to simulate the effects of immigration shocks on wages. He calculates that US immigration
in the 1980s and 1990s resulted in a 9% reduction in the wages of high school dropouts and a 4.9%
reduction in the wages of college graduates. These are the two education categories with the highest
shares of immigrants. For high school graduates, wages fell by 2.6% and workers with some college
were only minimally affected.

103
Borjas (2003) estimates of the effect of immigration are the largest not associated with an explicitly
adversary purpose. There have been a number of applications of the methods from this paper and
none have produced estimates of equivalent magnitude.2 The most explicitly critical work is contained
in a pair of papers by Ottaviano and Peri (OP; Ottaviano and Peri, 2008, 2010).3 The core of OPs
criticism is an argument that three of Borjas simplifying assumptions high school dropouts and high
school grads are imperfect substitutes, natives and migrants are perfect substitutes and capital is a fixed
endowment end up biasing his results towards finding larger negative effects of immigration. OP
work with the structural approach developed by Borjas, but they extend the approach to embed, and
test for, two versus four skill groups and perfect versus imperfect substitutability of immigrants and
native. To deal with the potential perfect substitutability between types of skilled and types of unskilled
labour, instead of equation (3), OP consider an aggregate of two types of labour LH (skilled) and LL
(unskilled), i.e.
1

L t = H L H t + L L Lt / ,
< =
H L 1
1,
H L
it = 1
(5)
iI
where HL is the elasticity of substitution between high and low skilled labour and each of the Lit is
itself an aggregate of two sub-types: LHt is a CES aggregate of college dropouts and college grads
and LLt a CES aggregate of high school dropouts and high school grads. This specification nests the
four skillgroup structure (i.e. equation 2) and can be used to test the Borjas specification against the
more standard specification. To deal with the assumption that migrants and natives might be imperfect
substitutes, they develop a fourth aggregate that produces the Lijt that are the inputs of equation (3)
from home and native workers with education level i and experience level j in time t:
1/

1
, < =
1,
L i jt = H i j t Hi jt + Fi jt Fi jt
H i j t + Fi jt = 1
(6)
where is the elasticity of substitution between home and foreign born labour. Finally, OP
introduce an explicit model of sluggish capital adjustment rooted in earlier work in empirical work
on economic growth. The empirical implementation results in two broad results: first, although high
school dropouts/high school grads and college dropouts/college grads are very good (essentially perfect)
substitutes for one another, their aggregates are very imperfect substitutes; and second, immigrants and
natives are imperfect substitutes for one another. That is, a model using two education groups and
distinguishing between natives and immigrants dominates the Borjas model. In addition, OP develop
a framework in which, assuming international capital mobility, capital adjusts to immigration shocks
to maintain a constant real return to capital and a constant capitaloutput ratio.4 Under these two
adjustments to Borjas structural model, OP calculate that immigration has had a small negative effect
on high school dropouts, positive effects on other groups and a positive aggregate effect on the average
wage of US workers overall.
Overall, then, the broad conclusion from all four approaches regional- versus skill-based
observations by structural versus reduced form methods to estimating or calculating the effect of
immigrants on native labour market performance come to the same conclusion: at worst, immigration
has small negative effects on native wages and employment prospects, with the largest negative effects
falling on previous waves of immigrants with the same labour market traits. There is some evidence
that, consistent with a loose interpretation of Samuelsons LeChatelier principle, the negative effects
are more severe in the short- than in the long run. For an area of research that is often seen as riven
by deep debates between rival schools, this level of overall agreement seems surprising.

104
GASTON AND NELSON
3.2 Empirical Links between Endowment Changes and Output Changes

Evidence on Rybczynski-like effects is found in the literature (often seeking to test Heckscher-Ohlin
(HO) theory) examining the empirical link between endowments and production structures. The most
straightforward approach exploits the fact that, under Heckscher-Ohlin-Vanek (HOV) assumptions (in
particular, common, constant returns to scale technologies and costless trade) and assuming m = n, there
is a linear relationship between outputs and endowments. A widely cited paper exploiting this approach
is Harrigan (1995) which constructs an analysis with four factors (capital, skilled and unskilled labour
and land) and 10 manufacturing sectors. Harrigan finds a statistically significant relationship between
endowments and outputs, but also finds large within sample prediction error. Ultimately he concludes
(p. 41) that there is more to the international location of production than can be explained by the free
trade/factor proportions model used here. Kim (1999) applies the method (with seven inputs and 20
manufacturing sectors) to the case of US states for the years 1880, 1900, 1967 and 1987. This analysis
found regional endowments explaining a large share of regional differences in output patterns. For
Kim, the alternative was local spillovers and agglomeration, for which he found little evidence. Several
papers using this approach are specifically concerned with the possibility of technological differences
between countries. Dollar et al. (1988), Maskus (1991) and Davis and Weinstein (2001) apply this
method to data sets with two inputs (K and L) and many sectors. Endowments play a major role,
but, contrary to the standard model, technology differences between countries appear to be significant
(and quite large). In work explicitly focused on both Rybczynski effects and technological difference,
Harrigan (1997) estimates a translog GDP function with seven manufacturing sectors and six factors
(arable land, two types of capital and three types of labour), for 10 industrial countries over the years
19701988. Importantly, technology in sectors is permitted to vary across countries and time in Hicks
neutral fashion. The results are consistent with significant effects of endowments on sectoral outputs.
Redding and Vera-Martin (2006) apply a similar method to the analysis of European regions, again
finding evidence that endowments help to predict production structure.
The work discussed in the previous paragraph interprets technological difference as a function of
differing degrees of technological progress across countries (and, possibly, sectors). An alternative,
and complementary, approach sees technological difference as a function of selecting technologies
from common sets in the face of differing prices. Thus, where the work discussed in the previous
paragraph presumes (and seeks to test for) FPE, the work considered in this paragraph permits factor
prices to differ across countries. That is, there may be multiple cones of diversification. An early
effort to identify production structure in the context of multiple cones is the work of Brecher and
Choudhri (1993). The authors develop a number of tests, applied to production data for the USA and
Canada, seeking to identify the presence and sources of non-FPE. The conclusion of this analysis
is that endowment differences matter in accounting for production structure, but that account must
be taken of inter-industry differences in factor prices seen as a function of imperfect factor mobility.
Schott (2003) marks a substantial advance in its attempt to develop direct tests of multi-cone production
that might be obscured by aggregation of different industries within standard industrial classifications.
Schott first demonstrates that three-digit industrial aggregates almost surely contain industries that are
heterogeneous in inputs, then constructs aggregates of industries that may be more heterogeneous for
specific countries and then estimates a model with multiple cones. Although there are some problems
in both the construction of the industry aggregates and interpretation of the results, Schott is quite
convincing that specialization of production structures in distinct cones plays an important role in
accounting for patterns of production.
Related to this work, and explicitly about immigration, is a pair of important papers by Hanson and
Slaughter (2002) and Gandal et al. (2004), the first dealing with the USA, the second with Israel. These
papers are based on a clever accounting decomposition that seeks to identify the contributions of outputmix change and technological change in adjusting to endowment shocks. Hanson and Slaughter present

105
results consistent with productivity-adjusted FPE across states and, further, present evidence suggesting
that states have absorbed changes in labour endowments primarily via skill-biased technological change
which is common across all states and, secondarily, via changes in output mix. That there should be
evidence of output-mix adjustment in a period of rapid and substantial technological change strikes us
as important. However, such evidence does not exist in the Israel case, where Gandal et al. find that
global changes in technology were (more than) sufficient to absorb the huge, relatively skilled influx of
immigrants from Russia. In addition to the finding that output-mix adjustment was playing a role, there
are two important implications of this work for the discussion to follow. First, there is some suggestion
that, at least among relatively developed economies, the assumption of a common technology across
countries may be less of a distortion that assuming a common technology across a finite period of
time (at least during a technologically dynamic period). Secondly, although appropriately constructed
comparative static analysis will identify important forces operating at the level of the economy as a
whole, dynamic forces that are not incorporated in the analysis might well overwhelm the static forces.
On the other hand, because these forces are both less well understood and less controllable, their
relevance for policy analysis is moot.
3.3 Geographical Heterogeneity and Immigration

To this point, we have stressed the fundamental theoretical consistency of the frameworks in use
by trade and labour economists. Both rely on assumptions of perfect mobility within the relevant
geographical market, perfect competition within all markets, constant returns to scale in production
and so on. The only essential difference between the two is dimensionality and here we have argued
for a presumption that the number of goods is at least as large as the number of factors of production.
Under this assumption, we have seen that FPI generally obtains. As we shall see, this seems broadly
consistent with the overwhelming majority of studies which find, at most, small wage effects. At a
minimum, something other than wage adjustment is going on it might be adjustment on the output
margin (as implied by FPI), or endogenous technological adjustment (as suggested by Ethan Lewis),
or something else, but there just is not much evidence of major adjustment on the wage margin.
This said, the apparent existence of quite distinct local economies is problematic for either approach.
Even within the state of California, we can observe distinct production structures between a northern
economy characterized by high tech industry supporting a high wage structure and a southern economy
in which low-tech industry supports a low wage structure. If local labour markets are somehow
segmented, this multi-cone structure is an equilibrium. However, the existence of free trade and free
factor mobility between northern and southern California would seem to be completely inconsistent
with an account of this sort. This leads us to the question of whether some form of geographical model
supports the endogenous determination of multiple local cones.
Bernard and Jensen (2000) note that although the USA as a whole experienced increasing wage
inequality, that this fact disguised very different patterns of wage inequality at the state level. In fact,
some states experiencing sharp declines in inequality. They argue that this fact argues against the view
of a well-oiled, highly integrated US economy at least in the short- to medium terms. In response
to employment shocks, Blanchard and Katz (1992) found that labour markets were integrated after a
period of 10 years. Interstate migration does indeed act to smooth shocks, but it only does so very
slowly. Wage adjustments were also extremely sluggish, with some effects often lingering beyond
10 years. In other words, shocks to regions are not rapidly transmitted to other regions. This suggests
that even the most carefully crafted research, for example, such as Borjas, which divides workers
into industry, occupation, education, experience, race and sex may be biased because it does not also
distinguish between locations or separate labour markets. There are at least two further implications
of this research. First, the measured effects on local labour markets are genuinely indicative of the

106
GASTON AND NELSON
small adverse impact that new immigrants have on native workers and second, that the skating rink
hypothesis, in which each new foreign unskilled worker forces a native off the ice (i.e. to migrate to
another region), is dubious.
In more recent work, Bernard et al. (2008, 2009) show that relative wages vary across regions
in the USA and the United Kingdom. They also show that the type of industry varies with the skill
wage premium and that skill-abundant regions exhibit lower skill wage premia than skill-scarce regions.
Hence, firms adjust production across and within regions in response to relative wage differences. In an
HO model with multiple cones of diversification one implication is that different regions with different
skill endowments have different relative wages. In equilibrium, regions abundant in skilled workers
offer lower skill premia. This finding is seemingly at odds with economic geography models that have
skill abundance and skill premia being positively related as a result of agglomeration externalities.
The existence of multiple cones suggests that economic activity tends to agglomerate. Courant and
Deardorff (1992) show that when factors are immobile, regions specialize in the good that uses most
intensively their abundant factor. The lumpiness of factor endowments also constitutes a basis for trade.
The point of course is that regions within countries often differ more than they do with comparable
regions overseas. The lumpiness can be sustained by lower prices for non-tradable goods or by locational
amenities, such as nice weather. In the latter case, real wages would not equalize, although sunshineadjusted real wages would. Hence, there would be no FPE. In a similar vein, Overman and Puga (2002)
show the existence of regional unemployment clusters in the EU which often span national borders.
They argue that the clustering reflects the agglomeration effects of economic integration. Interestingly,
the polarization into high unemployment regions and low unemployment regions cannot be being driven
by migration because intra-regional migration has been falling in Western Europe.
When regions are skilled labour abundant, they are attractive to skill-intensive industries. This is
illustrated in Figure 1, which is taken from Bernard et al. (2003). Unit-value Leontief isoquants for three
industries are shown. Endowments of skilled (z1 ) and unskilled (z2 ) workers for regions A and B are
also shown. There are two cones of diversification. The relative wage of skilled workers is easily seen
to be lower in B, which is relatively skill abundant. Obviously, regions exhibit systematic differences in
Figure 1. Multiple Cones in the HO Model.


107
production structure. Thus, one of the other major findings is that firms reallocate production facilities
that best match their factor needs, i.e. industries move towards workers more readily than workers move
towards industries Bernard et al. (2003, p. 14).
4. Global Effects of International Migration

Until this point we have looked at the issue of migration primarily from the perspective of a single,
immigrant-receiving country. We now turn to two issues which are fundamentally about the international
equilibrium: comparative advantage and the pattern of trade and the relationship between trade and
factormobility.
4.1 International Equilibrium and Comparative Advantage with (Some) Mobile Factors
As explained by Ethier (1986), immigration has an interesting effect on comparative advantage in the
Ricardian model. Free migration equalizes wages, but in the Ricardian model this means that absolute
advantage will determine the location of production (rather than comparative cost differences). If either
country has an absolute advantage in the production of both goods, the technologically disadvantaged
country will simply empty out. In the intermediate case, in which each country has an absolute
advantage in the production of one of the goods, the world economy functions like a single Ricardian
economy, so relative commodity prices are solely determined by technology. However, tastes play
a role in the determination of the pattern of labour flows between the two countries. Specifically, if
world demand is such that, at the technologically determined prices, the demand for the good produced
in, say, the home country exceeds the capacity of the initial home labour endowment to produce that
good, migration will flow from foreign to home.
Factor mobility in the basic HOS model is also quite straightforward. The classic paper here is by
Mundell (1957), who retained the full set of HOS assumptions and proved a converse to Samuelsons
FPE theorem. As we discuss in the next section, under HOS assumptions, factor mobility is at least
a partial substitute for commodity mobility. One way of seeing this is that free trade without factor
mobility can produce the same equilibrium (in the sense of final prices and allocations) as free factor
mobility without trade. The key here is that the endowments of the two countries must fall in the same
FPE region. Where specialization can interfere with complete equalization of factor prices, if one of
the factors is mobile as well, there must be FPE. In the absence of trade, mobility of one factor will
move the national economies towards the integrated equilibrium, and to it if the initial endowments are
sufficiently similar. Furthermore, the directions of trade and migration are predictable based on initial
endowments and knowledge of the common technologies.
Beginning with important papers by Kemp (1993) and Jones (1967), the focus of much of the
literature on trade and migration in general equilibrium shifted to models in which countries differ
in their technologies. Ruffin (1984) refers to the HOS model with mobile capital under international
differences in technology as the KempJones model. Jones argued that, with technological differences,
there was a presumption that international factor mobility would lead to specialization of at least one
economy: This will certainly be the case if one country has a technological advantage in one sector. In
that case, the model will have a strongly Ricardian flavour with technological difference determining
the pattern of international flows.5 However, if there is a reversal of comparative costs, there will be
some factorprice ratio at which both countries are unspecialized and there will be a range of feasible
outputs over which the allocation of production between the countries is indeterminate.
Markusen and Svensson (1985) extend this analysis to the m n case. They follow Dixit and
Woodland (1982) and Svensson (1984) in beginning with identical countries and, where the previous
papers consider the effect of a marginal change in endowments, considering the effect of a marginal

108
GASTON AND NELSON
change in technology on one of the countries. Not surprisingly, it is difficult to derive much in the
way of general results. However, assuming a specific form of product-augmenting technical change,
Ethier and Svensson are able to show that factor mobility strengthens the relationship between trade
and endowments in the no factor mobility case; and are able to show that countries will import factors
that are used intensively in the sectors with technological advantage. As in the KempJones case,
international factor mobility pushes countries to specialize more strongly and induces a Ricardian
element in the model.
A different generalization involves introducing transaction costs into an otherwise standard HOS
model so that with trade in goods alone factor prices are not equalized, which creates a new basis for
international factor mobility with trade in goods. Norman and Venables (1995) develop this analysis
and derive the pattern of trade in goods and factors endogenously (see also Tombazos et al., 2005
for related work). Not surprisingly, the interactions between commodity and factor trade can be quite
complicated.
An alternative way of avoiding specialization is to work with a multi-sector specific factors model
with an internationally mobile specific factor. With the specific factors model, we must first decide
whether the globally mobile factor is inter-sectorally mobile or specific to one of the sectors. This
would seem to be tricky on a priori grounds. Suppose, as is often the case, that we are interested in
unskilled labour mobility and that we denote its factor payment as w. Does it make more sense to think
of this as an undifferentiated factor that is used in all sectors (e.g. field hands, janitors, construction
workers) or, recalling that we are working with a relatively low dimensional model of the economy as
a whole, do we think of unskilled labour as being specific to some broadly construed sector (labourintensive agriculture, unskilled services or some composite of such sectors) with a factor like capital
as the mobile factor? We do not think there is a good answer to this question. If we presume, as in the
HOS case, that preferences are identical and homothetic and technologies are identical and linearly
homogeneous across countries, the analysis of comparative advantage is straightforward in either case.
If the internationally mobile factor is used in both sectors, the presence of specific factors in
both sectors under standard technologies implies that equilibrium will involve positive use of the
internationally (and inter-sectorally) mobile factor in both countries. However, this means that w =
w (i.e. unskilled labour moves until the wage is equalized) and both countries produce both goods
in equilibrium. However, this implies that the payments to the other factors must be equalized as
well. With identical, homothetic preferences and equalization of goods prices by trade in goods, both
countries indirectly consume factors in the same proportions, so each country will export the product
that uses the specific factor with which it is abundantly endowed.
Suppose, instead, that unskilled labour is specific to a single sector and that the inter-sectorally
mobile factor is not internationally mobile. Now there are two possibilities: mobility does not equalize
wages and so all unskilled labour ends up in the country with the higher wage; or mobility equalizes
the unskilled wage between countries. In the first case, the country of immigration produces both goods
but exports the good using the internationally mobile specific factor, whereas the country of emigration
specializes in the production of (and thus exports) the other good. In the second case, unskilled wages
are equalized by migration with positive allocations of unskilled labour to both countries. In this case,
both countries produce both goods and, as in the previous case, all factor prices are equalized. Once
again, comparative advantage will be determined by the relative endowments of the immobile factors.
4.2 Are Factor Mobility and Commodity Mobility Complements or Substitutes?

An issue of theoretical, empirical and policy interest is the degree to which trade and migration
are substitutes or complements. As a policy matter, it is often argued that countries have a choice
between admitting goods and admitting people. During the North American Free Trade Agreement
(NAFTA) debates, proponents of NAFTA often argued that the USA could reduce immigration pressure

109
by increasing its trade with Mexico. Similar arguments have been made about the EUs eastern
enlargement (e.g. in Layard et al., 1992). The default position for most people seems to be that
trade should be expected to substitute for immigration. The logic is clear enough and derives directly
from the HOS model: commodities are simply bundles of factors of production, so trade along HOS
comparative advantage lines should cause factor prices to become more similar, reducing pressure for
migration.
4.2.1 Complements and Substitutes in Theory

Mundells (1957) classic develops precisely this logic. In the context of a standard 2-factor 2good 2-country HOS model, Mundell proves a converse to Samuelsons (1949) FPE theorem.
Samuelson showed that, under the full set of HOS assumptions and as long as both countries
remained unspecialized after the opening of trade, free trade between countries that differ only in
their endowments of productive factors, in addition to equalizing commodity prices, must equalize the
real prices of factors even though they are not internationally mobile. Furthermore, even if one country
specializes before factor prices are completely equalized, commodity trade must cause factor prices to
move towards equalization. The key to understanding this result is that, in the HOS model, there is
a one-to-one, technologically determined, relationship between relative commodity prices and relative
factor prices. Figure 2 is a diagram of the sort Samuelson used to illustrate this fact (Samuelson,
1949, p. 188).6 As Mundell argued, under the same conditions (in particular, non-specialization) that
guaranteed FPE, if a wedge is driven between commodity prices (say, by a tariff) but factor mobility
is permitted, that factor mobility will support the same allocations as in the free trade equilibrium.
Not surprisingly, the same diagram illustrates this fact: start from an equilibrium where countries are
in autarchy, so that they are at different points on the p- schedule; now permit factor mobility so
that factor prices are equalized; it must be the case that commodity prices are equalized. Furthermore,
given the assumptions on technology and demand, this must be the same relative commodity price and
Figure 2. Substitutes in Samuelsons FPE Diagram.


110
GASTON AND NELSON
Figure 3. Complements in Samuelsons FPE Diagram.
relative factor price as in the free trade case.7 Thus, as the public logic maintains, in this case trade
and immigration are substitutes.
However, it turns out that most movements away from the strict HOS framework open the door to
complementarity (or, at least, greater complexity) in the relationship between commodity trade and
factor trade. Consider the 2-factor 2-good model and retain all of the HOS assumptions except we
suppose countries have identical initial endowments and that one country (home) has a Hicks neutral
superior technology in the production of good 1. In terms of the technological relationship between
factor and commodity prices in Figure 2, if this is the only change relative to the economy represented
there, the home country will be represented by a curve that lies uniformly below that of the foreign
country (which is represented by the original curve). Figure 3 reflects this change. Now suppose that
free trade results in the equalization of commodity prices at pw . Note that national factor prices are
different. Specifically, as drawn, the return to labour in home exceeds the return to labour in foreign.
In this trading environment the home country exports L-intensive good 1. If we now permit migration,
labour will flow to the home country, increasing its comparative advantage in standard Rybczynski
fashion and, thus, increasing trade. So factor mobility is complementary to free trade in goods. Now
suppose, instead, that free migration is permitted following the technical change. Labour moves until
real wages are equalized. If both countries continue to produce both goods, the factorprice ratio
() will be equalized but commodity prices will move apart. If trade is now permitted, there will be
increased production of each countrys comparative advantage good, which should result in increased
migration. Thus, trade is complementary to migration. It is easy to see that the migration only and
trade only equilibria involve very different commodity and factor prices. Thus, neither alone moves
the economy to the integrated equilibrium. Rather, that requires both to be fully mobile, so trade and
migration are allocation complements as well.8
Markusen (1983) and Ethier (1996) consider a variety of other sources of comparative advantage,
including taxes, economies of scale, imperfect competition (monopoly, oligopoly and monopolistic
competition) and factor market distortions. Ethier (1996, p. 65) summarizes these additional cases as
follows: There is a strong presumption that intra-industry trade and trade due to aggregative economies of
scale or to international differences in the degree of imperfect competition are strongly complementary to

111
migration. There is also a strong presumption that inter-industry trade due to disaggregative economies of
scale or to monopolistic competition relates to migration in the same ways as does comparative advantage
trade.
Taking all of this together, it seems clear that theory alone does little to underwrite any strong
presumption of a complementary or substitutive relationship between trade and migration. However,
it is interesting to note that research on the foundations of comparative advantage over the last
couple of decades has stressed precisely the factors that imply a presumption of complementarity (i.e.
technological differences and monopolistic competition as a foundation for intra-industry trade). This
leads us to the empirical evidence on the relationship between trade and immigration.
4.2.2 Empirical Research on Complements and Substitutes

All of the theoretical work we have discussed to this point considers the question of whether trade
and migration (or capital flows) are substitutes or complements in terms of factor arbitrage. That is,
the source of any relationship is taken to be the way factors respond to differences in wages (or
rentals) between countries. Early empirical work on this question was motivated in precisely this
fashion. Early work by Horiba and Kirkpatrick (1983) looked at inter-regional trade and migration
between US regions (South and non-South) in the 1960s. This paper looked at quantity flows of people
(considering heterogeneity of labour) between regions and (using standard input-output techniques) the
flows of labour embodied in trade. Under the maintained assumption of an m n HO-type economy,
labour is predicted to flow from a region relatively well endowed with labour to regions relatively
poorly endowed with labour; and, in standard HOV fashion, embodied trade in factors should follow
the same pattern. For our purposes, the key finding was that both of these predictions were borne
out.9 In addition, there was some evidence of a tendency towards FPE. These results would seem to
be broadly consistent with a substitutive relationship between trade and labour mobility. In a recent
paper, Horiba (2008) carried out the same analysis on more recent data (from the 1970s and 1980s)
and confirmed his earlier finding. These results are closely related to a growing body of trade research,
discussed above, whose results suggest that the HO model, under various plausible extensions of the
model (e.g. the presence of trading costs or Hicks neutral international differences in technology) and
generalization of the Rybczynski theorem, does a reasonably good job of accounting for production
patterns, and research on growth which fails to find a link between migration and convergence.10
A more direct approach to evaluating the relationship between trade and migration involves
introducing migration into a theoretically well-grounded model of international trade. One approach
that has been applied a number of times involves estimating a maximum value function consistent with
competitive models and evaluating the relationship implied. We have already seen this methodology
applied to the question of the relationship between immigration and wages. An early paper by Wong
(1988) estimated an indirect trade utility function, for the US economy with three final goods and three
factors of production, using annual data from 1948 to 1983, yielding elasticities that allowed him to
evaluate the effects of migration on trade. This function is estimated, in translog form, on prices for
home produced durable goods, home produced nondurable goods and services, and imported goods
and services, and endowments of capital, land and labour, for a number of years between 1948 and
1983. Wong finds that trade is a quantity complement to immigration.
Ulrich Kohli is the scholar that is probably most associated with the development and application
of these methods to international trade and migration. Following original work by Burgess (1974),
empirical trade economists have exploited duality theory to estimate comparative static effects of trade
by treating trade as a direct argument in a GNP function.11 That is, trade is treated as an intermediate
input to the production of GDP. It is straightforward to treat immigrant labour in a similar fashion.
The marriage of this approach to trade modelling to the production theoretic modelling of immigration

112
GASTON AND NELSON
seems obvious, but has only rarely been done. Kohli (1993, 1999, 2002) develops this sort of analysis
in considerable detail. With particular reference to the Rybczynski relations, using Swiss data, most of
Kohlis work analyses a single output economy and cannot really speak to Rybczynski effects. However,
the economy in Kohli (2002) has two final outputs (exports and domestically consumed goods) and
here there is evidence that immigration is associated with increased production of the domestic good,
but not the exportable.
Hijzen and Wright (2010) apply the Kohli (1993, 1999) methodology of treating imports and
immigrants as intermediate inputs to final output using UK data for the period 19751996. In an
important extension, Hijzen and Wright divide immigrants (and the endowments of domestic labour)
into skilled and unskilled labour; thus, production involves capital, domestic skilled labour, domestic
unskilled labour, immigrant skilled labour, immigrant unskilled labour and imports. In addition, because
they want to permit output adjustment, Hijzen and Wright consider two outputs skill- and unskilledintensive outputs. The results here are interesting: skilled immigrants are quantity complements with
trade; but unskilled workers are, if anything (i.e. the result is statistically insignificant), quantity
substitutes.12
In all of the empirical work explicitly motivated by the theoretical frameworks discussed to date,
migration (factor mobility more generally) is an arbitrage activity. Trade costs, especially such
essentially social cost reducing phenomena as networks, play no role. However, the great majority
of empirical research addressing the relationship between trade and migration has taken place in
the context of a gravity model, where migration and/or trade enter as a factor that affects costs.
Thus, although the empirical issue of whether trade and migration are substitutes or complements can
be addressed, the theoretical motivation ends up being rather different. Most of this research treats
aggregate exports or imports between a pair of countries as the dependent variable and immigration
as an independent variable. In most of these papers, this is seen as reflecting either a direct increase
in the demand for goods from the immigrants home countries; or a reduction in information costs (in
either direction) resulting in increased trade.
4.3 The Social Structure of Migration: Networks, Migration and Trade

The research we have reviewed to this point treats migration as an instance of factor arbitrage, where the
relationship between trade and immigration emerges from the general equilibrium. For this analysis,
there was no essential difference between capital and labour: both generate income for households
and can be used to produce outputs for given production functions. To the extent that there is any
difference, it is not uncommon to treat the income from internationally mobile capital as consumed
in its home country, whereas the income from mobile labour is consumed in the host country. This
is an extremely useful simplification for many analytical purposes; however, it is also the case that,
in many ways, capital and labour are fundamentally different things. In the words of the Swiss writer
Max Frisch commenting on guest worker programmes: We wanted workers, we got people. Capital, by
contrast, is fundamentally separable from its human owners. Thus, in addition to differences in the
skill mix (and possibly taste differences) of migrants relative to natives, immigrants also carry cultural
differences that might affect their willingness to cooperate with natives in unions (and vice versa).
Perceptions of social or citizenship difference might affect the legitimacy of state transfer programmes
or participation in reciprocal arrangements natives in the labour market. These perceptions of difference
even go to economically important social values like fairness. Sociologists and political scientists have
dealt, seriously and at length, with many of these issues. Here we focus on those elements that emerge
directly in the analysis of international trade, or apply trade theoretic methods.
Emigration and immigration are far from uniformly distributed across the globe. This heterogeneity
becomes even more pronounced as one takes account of individual-level variation (e.g. by age, gender,

113
education, etc.). Accounting for this heterogeneity in aggregate patterns has been a very active area of
research for a long time, and that activity continues to this day. For economists, the essential starting
point for such analysis is the notion that emigration emerges from a utility-maximizing choice. Because
this decision involves comparison of returns to various choices that occur in time, it is convenient to
conceive of the choice as one of investment in human capital. In making such a comparison, a
potential emigrant compares the origin country wage to that in alternative destination countries. For
each destination country, the potential emigrant must deduct the costs of migrating to that country.
Because all of this must be done in expectation, one might also want to include a measure of the
likelihood of finding a job (e.g. a comparison of unemployment rates). An important advance in
the theoretical and empirical analysis of immigration flows was Borjas (1987) adaptation of Roys
(1951) model of occupational selection to the case of selection among emigrant destinations. Although
Borjas was primarily interested in identifying the causes and consequences of differences in immigrant
quality across source countries to the USA, he also argues that the same analytical framework predicts
emigration pattern across those source countries.
Taking per capita GDP as a proxy for wages and distance as a proxy for costs, one can represent the
RoyBorjas selection model, loosely speaking, by a gravity model.13 Gravity modelling of migration
generally takes the form:
m i jt = Gi jt + i jt + i jt
(7)
where mitj is the value of migration from origin country i to destination country j; Gijt is a matrix of
standard gravity variables (e.g. origin and destination GDP, distance and other migration cost variables);
ijt is a matrix of fixed effects and is an error term. Among the papers motivating a gravity-based
analysis by reference to Sjaastad and RoyBorjas are: Karemera et al., (2000), Clark et al. (2007) and
Lewer and Van den Berg (2008). More recently, in addition to Borjas (1987) a number of papers have
sought to make the link between the RoyBorjas model and the gravity framework more explicit, for
example, Dahl (2002), Mayda (2010) and Grogger and Hanson (2008). All of these papers consistently
find destination GDP positively and distance negatively associated with migration flows. Unexpectedly,
origin GDP (which should be negatively associated with migration and about the same magnitude as
origin GDP) is generally not significantly different from zero and even sometimes of the wrong sign.14
In addition to such standard gravity variables, immigration policy variables in the destination country
have been found to have a significant effect (Bertocchi and Strozzi, 2008; Mayda, 2010; Letouze et al.,
2009; Ortega and Peri, 2009). We note, for later reference, that a small number of papers introduce
some trade variable into the migration gravity model (Molle and Van Mourik, 1988; Gallardo-Sejas
et al., 2006; Letouze et al., 2009). In all cases, the trade variable is positive and, usually, significant.
Stories about immigration, whether contemporary or historical, journalistic, academic or fictional,
have long stressed the role of social relations as an essential element in the decision to engage in
migratory behaviour. Migrants are linked to both their home and host countries by networks that
provide information, resources and comfort, all in a variety of forms (Hugo, 1981; Boyd, 1989;
Gurak and Caces, 1992; Portes and Sensenbrenner, 1993). Where economists have tended to analyse
immigration as reflecting optimization by individuals or households, sociologists and demographers
have been very successful building network models of the immigration decision.15 More recently, as
economists have developed increasingly sophisticated models of networks, these considerations have
increasingly been built into migration analysis.16 Empirical work seeking to explain migration patterns
now commonly includes variables intended to capture network effects usually some measure of stock
of immigrants from a given home country in a given host country. The key here is not that networks
substitute for rational choice of destinations by migrants, but that networks affect the costs of migrating
to one market versus another.
Just as networks play a fundamental role in getting migrants from one country to another, and helping
determine the allocation of migrants from home to host countries, networks also play a fundamental

114
GASTON AND NELSON
role in organizing the social and economic life of migrants once they arrive in a given host country.17 Of
particular interest for us is the way that networks affect the relationship between migration and trade.
Broadly speaking, networks of migrants might affect international trade by responding to two sources of
transaction costs: uncertainty/incomplete information and asymmetric information/opportunism. With
respect to the former, the idea is that trade in some commodities requires search and that the cost of
such search varies systematically across countries. Especially for the case of specialized/differentiated
goods, the lack of a deep, well-developed arms-length market can require costly search. When this
search must occur across international borders, especially between countries with very different social
and/or political structures, those costs can be quite high (Rauch, 1999; Rauch and Casella, 2003;
Portes and Rey, 2005). In this situation, migrants can act as weak ties in Granovetters (1973, 1983,
2005) sense of providing an information bridge between two dense networks (in this case, suppliers
in the home market and demanders in the host market). That is, because migrants possess economic,
cultural and institutional knowledge about both the home and the host markets, they are able to mediate
economic exchange between those markets, thus increasing trade above what it would be in the absence
of such migration. In this case, migrants engage in market creation. Because such information problems
are expected to be more severe for differentiated products, we would expect to find strong positive
effects for trade in such products, especially between countries with very different economic, cultural
and political environments. Arguably, once such a bridge has been constructed, the need for additional
migrants might well be expected to decline.
Unlike transactions costs that emerge through simple lack of knowledge, those related to asymmetric
information, imperfect enforcement of contracts and opportunism create a more fundamental role for
networks.18 In an environment characterized by these problems, the opportunity for mutually beneficial
trades may be foregone (Anderson and Young, 2006). In the limit, these problems can cause the collapse
of markets. This, in turn, creates an opportunity for non-market (or market replacing) institutions,
which, of course, is the opening wedge for Williamsons (1975, 1985, 1996) Nobel Prize winning
development of transaction cost economics. However, independently of transaction cost economics
emphasis on the role of asymmetric information and opportunistic behaviour in understanding the
creation and operation of firms; anthropologists, sociologists and historians used essentially the same
factors in explaining the role of ethnic networks and diasporas in the organization of trade across
political jurisdictions or, more generally, in the absence of effective protection of contractual/property
rights (Polanyi, 1957, 1968; Geertz, 1963, 1978; Cohen, 1969, 1971; Bonacich, 1973; Curtin, 1984).
More recently the analytical structures of transaction cost economics (Landa, 1981, 1994) and game
theory (Greif, 1989, 1991, 1993, 1997; Dixit, 2003a, 2003b, 2004, 2009) have provided more formal
frameworks for examining these relationship-based trade links. The basic idea here is that ties of trust
and social capital more generally, built up among co-ethnics in the migration process can substitute
for imperfect contract enforcement (whether a function of incomplete contracts or lack of effective
judicial systems). The enforcement mechanism in this case is exclusion from the social and economic
benefits of the community/network.19 As with the case of transaction costs deriving from informational
problems, where migrants engage in market creation, we would expect contracting problems to be
most severe in the case of goods for which a deep, arms-length market does not exist. However, unlike
that case, where we might expect the need for a weak link to decline once the information bridge has
been built; as long as the contracting problem remains in a given market, the need for the contract
enforcement role of the network will remain in place. Furthermore, to the extent that the role of the
ethnic community declines with successive generations, we might even expect a need for continuing
flows of migrants to support that role.
Before turning to a discussion of the empirical work on the role of immigrant networks in reducing
trade costs, we should note that, in addition to the role of networks, the most straightforward way that
immigrant differences might affect trade patterns runs through preferences immigrants may have a
preference for their own goods that they bring with them when they emigrate.20 Not only does this

115
have a direct effect on demand for the immigrant-preferred goods, but we would also expect that
demonstration effects would increase the demand for these goods among natives as well. Given that
non-immigrants from a given country (i.e. natives and immigrants from other countries) will generally
dramatically outnumber immigrants from a given country, we might expect the indirect effect to be
larger than the direct effect. It is conventional in the empirical literature to assert that taste effects
should affect only imports, and among imports only consumer goods. Although this may be a plausible
approximation, it is surely the case that information gleaned by immigrants from consuming in the
host country can be transferred to the home country in a variety of ways. Thus, the common inference
in the gravity literature that a positive estimated effect of immigrant stock on imports is evidence of
a preference effect, whereas a positive effect on exports is evidence of network effects, seems less
than strong. By contrast, the presumption that the preference effect should be seen in consumer goods
seems quite well founded. In either case, when evaluating the link between immigration and trade, we
surely need to account for the effect of differences in preferences between immigrants and natives.
Empirical work suggesting the presence of large border effects (McCallum, 1995; Helliwell, 1998)
and missing trade (Trefler, 1995) has spurred extensive research on the role of trade costs as a source
of these findings (Anderson, 2004; Anderson and VanWincoop, 2004) and networks as a response to
these costs (Rauch, 2001; Combes et al., 2003). A standard tool for evaluating the effects of such
trade costs is the gravity model. Analysis using gravity models has provided strong support for the
notion that social and political differences, and poor enforcement of contractual rights, act as barriers
to trade.21 We are particularly interested here in the evidence of the role of immigrant networks in
alleviating these transaction costs. Gravity modelling of trade, with the variables extended to include a
migration variable, takes the form
xi jt = m i jt + Gi jt + i jt + i jt
(8)
where xitj is the value of dyadic trade (exports or imports) between partner country i and reference
country j at time t, Gijt is a matrix of standard gravity variables (e.g. reference and target country GDP,
distance and other trade cost variables), ijt is a matrix of fixed effects and is an error term. The
parameter of interest in this work is . Because these models are commonly estimated in logs, this can
be interpreted as an estimate of the elasticity of trade volume with respect to immigration.22
The seminal paper here is Goulds (1994) study of the effect of immigrants on trade between the
USA and 47 trading partners that were also sources of US immigrants, for the years 19701986. In
addition to estimating a gravity model, extended to include stocks of immigrants from the foreign
country residing in the USA, for bilateral aggregate imports and exports; Gould also estimated separate
regressions for imports and exports of producer and consumer goods. With respect to aggregate imports
and exports, Gould found immigrants increased trade (though at lower levels than much of the later
literature); and, somewhat unusually given later results, found a larger effect on exports than on imports.
The usual inference from this pattern is that preference effects explain the difference between the import
effect and the export effect (because the network effects are apparently taken to be symmetric). Thus,
this is taken as evidence against a significant role for preference effects. When the analysis was done
on consumer and producer goods separately, Gould found the effect on consumer goods was larger for
both imports and exports. Goulds presumption was that consumer goods are more differentiated than
producer goods and took this as evidence of network effects.23
Building on Goulds original work, a sizable literature of gravity-based estimates of the effect of
migration on trade has developed. The single most studied reference country is the US (Dunlevy and
Hutchinson, 1999; Hutchinson and Dunlevy, 2001; Co et al., 2004; Herander and Saavedra, 2005;
Mundra, 2005; Dunlevy, 2006; Millimet and Osang, 2007; Bandyopadhyay et al., 2008; Tadesse and
White, 2008, 2010; White, 2007b, 2009; White and Tadesse, 2008a, 2008b; Jansen and Piermartini,
2009); however, there are also analyses featuring Canada (Helliwell, 1997; Head and Ries, 1998; Ching
and Chen, 2000; Wagner et al., 2002; Jiang, 2007; Partridge and Furtan, 2008); the UK (Girma and

116
GASTON AND NELSON
Yu, 2002; Ghatak et al., 2009); Switzerland (Kandogan, 2009; Tai, 2009); Germany (Bruder, 2004);
Denmark (White, 2007a); France (Briant et al., 2009); Spain (Blanes-Cristobal, 2004, 2005, 2008);
Greece (Piperakis et al., 2003); Italy (Murat and Pistoresi, 2009); the EU 15 (Parsons, 2005); Australia
(White and Tadesse, 2007); New Zealand (Bryant et al., 2004) and Malaysia (Hong and Santhapparaj,
2006).24 Very broadly, and with very few exceptions, these papers consistently find significant positive
effects of immigration on trade whether measured as imports or exports. Furthermore, of the papers
that report results for both imports and exports, it was about twice as common to find the estimated
effect of immigration on imports greater than that on exports. Again, this is taken as evidence that
preference effects and network effects are both operating.
In addition to aggregate imports and exports, a number of papers also estimated separate regressions
for various categories of commodities: consumer and producer goods (Gould, 1994; Blanes-Cristobal,
2004, 2008; Herander and Saavedra, 2005; Mundra, 2005; Kandogan, 2009); Rauchs (Rauch, 1999;
Rauch and Trindade, 2003) quality categories (White, 2007a; White and Tadesse, 2007; Briant
et al., 2009); intra-industry trade and inter-industry trade (Blanes-Cristobal, 2005); manufactured
and non-manufactured goods (Blanes-Cristobal, 2005; White and Tadesse, 2007); cultural and noncultural goods (Tadesse and White, 2008, 2010; White and Tadesse, 2008b) and various productspecific disaggregations (Dunlevy and Hutchinson, 1999; Hutchinson and Dunlevy, 2001; Jiang, 2007;
Kandogan, 2009; Tai, 2009). These papers attempt to identify the category of commodity that is most
likely to be characterized by product differentiation and, thus, information problems, for example,
consumer goods; differentiated good and products traded on an organized exchange; intra-industry
trade; manufactured goods and cultural goods. The hypothesis is that these goods will be traded less,
so immigrants will improve their tradability more. In addition, goods are differentiated by category
of trading partner: by common colonial past (Girma and Yu, 2002; Blanes-Cristobal, 2004, 2008);
goods differentiated by per capita income of the exporter (Co et al., 2004; White, 2007b, 2009);
by whether the trading partner is an old or new market (Murat and Pistoresi, 2009) or by cultural
similarity (proxied by language in many papers). Commodities from more foreign trading partners
should be traded less and, thus, immigrants should improve their tradability more. Although these
variables might be tapping the need for either market creation or market replacement, papers that
use variables measuring corruption or institutional quality (Briant et al., 2009) are directly related
to the market replacing role of immigration. In both cases, the usual strategy is either to estimate separate
regressions across category and compare coefficients, or to interact a dummy for the category with
the immigrant stock measure. Across categories and specifications, the results are broadly consistent
with the expected outcomes. That is, more differentiated goods and more foreign countries tend to be
associated with greater trade creation from immigration. Again, this is taken as consistent with one
of the information stories (market creating or market replacing) and providing less support for the
preference effect of immigration.
A number of papers have taken advantage of the existence of trade and migration data collected at
sub-national levels: Canadian provinces (Helliwell, 1997; Wagner et al., 2002; Partridge and Furtan,
2008;); French departements (Combes et al., 2005; Briant et al., 2009) and US states (Bardhan and
Guhathakurta, 2004; Co et al., 2004; Dunlevy, 2006; Millimet and Osang, 2007; Bandyopadhyay et al.,
2008; Tadesse and White, 2008, 2010; White, 2009). The first benefit of using sub-national data is
that they permit the analysis to focus on more specifically defined geographical regions, thus achieving
greater precision in estimation. A related benefit is that analysts can control for national level common
determinants of trade and migration using country-level fixed effects, but still retaining sub-national
level variation for identifying the effect of migrants. A particularly interesting paper in this group
is Herander and Saavedras (2005), which attempts to identify the relative effects of both state- and
national-level migrant stocks. Consistent with the motivation for all of these papers, Herander and
Saavedra find strong evidence that the local effects are larger than the national effects. This suggests
that, whether they are mainly market creating or market replacing, network links are about proximity.

117
Herander and Saavedra also test for whether size of previous immigrant stock reduces the effect of
current immigrants on trade flows. Consistent with Goulds result, these authors find that previous
immigrant stock does reduce the effect of current immigrants. Given the discussion above (i.e. that
market creating networks should experience such a decline, whereas market substituting links do not),
this would appear to be strong evidence in favour of the relatively greater importance of market
creation.
To summarize: there is strong and consistent support for immigration having a positive effect on
trade; that link appears to be stronger for commodities whose trade is likely to involve informational
problems; that link appears to be stronger for trade with countries that are different from the reference
country on a number of dimensions and that link appears to be stronger when the partner country
is characterized by institutional problems.25 This would seem to be strong evidence for the network
story. However, because these analyses are never carried out in the context of a structural analysis that
permits an evaluation of the relative price effects that drive the general equilibrium analysis standard in
the trade theoretic accounts, these results neither permit comparison with the trade theoretic claims, nor
do they speak directly (or unambiguously) to the issues of whether trade and migration are substitutes
or complements.
5. Welfare and Political Economy

In this final section, we address two important areas of research of interest to both trade and labour
economists: the welfare evaluation of immigration and the political economy of immigration policy.
These make a natural pair. To the extent that immigration policy is not optimal, and abstracting from
claims that political decision makers are ignorant, welfare analysis virtually always constitutes the
opening wedge for political economic analysis.
5.1 The Welfare Economics of Migration

Researchers on international trade have developed an extensive body of both theoretical and applied
work on the welfare economics of international trade. Results here range from the fundamental gains
from trade propositions and various applications of the theory of second best to work on optimal
policies. Applied work has focused on costs of protection and gains from liberalization, both at the
national and at the global levels. Not surprisingly, there is a sizable body of theoretical welfare results
on immigration in the trade theoretic tradition and a (much) smaller body of applied work seeking
to identify the magnitudes of gains involved. Perhaps surprisingly, there is considerably less work
on welfare deriving from work in labour economics. More interestingly, there seems to be a deep
difference in the normative point of view underlying attempts to do welfare economics on trade and
migration.
Even if we take a broadly utilitarian approach to welfare analysis, that analysis needs to decide on
level of analysis and the status of the migrants themselves. One position, obvious from a thoroughgoing
utilitarian position, is to treat the unit of analysis as the globe and to include the welfare of migrants in
the calculation.26 Extensions of the usual gains from trade theorems underwrite the claim that global
welfare is improved by free migration (Kemp, 1993; Hammond and Sempere, 2006). It is hard to
conceive of any broadly liberal analysis that proceeds from a global and inclusive perspective that
does not draw such a conclusion.27 Attempts to evaluate the global gains from freeing migration,
usually based on computable general equilibrium models, uniformly find that these gains are very
large and, in particular, substantially larger than the gains available from further liberalization of
international trade (Hamilton and Whalley, 1984; Moses and Letnes, 2004; Walmsley and Winters,
2005). The framework that is the structural basis for these analyses is usually very simple (some
version of the McDougallKemp, k-country m-factor 1-sector, model). The analysis proceeds

118
GASTON AND NELSON
from the assumption that all labour is the same and that wage differences reflect policy distortions.
The gains then reflect the increases in world income available from arbitraging away those distortions.
Unfortunately, the absence of a global redistributive authority renders much of this analysis
problematic from a practical point of view. As with the welfare analysis of international trade, turning
a potential welfare gain into an actual welfare gain requires (preferably lump sum) redistribution.
This redistribution has both intra- and inter-national components. We will consider the intra-national
element momentarily, here we note that a standard result of the general, global welfare analysis is
that the country of origin cannot gain from migration and the country of destination cannot lose
(Wong, 1986; Tu, 1991; Frydman and Saks, 2007).28 As Kemp (1993, p. 3) notes: Compensation is
always of the initial population, including emigrants but excluding immigrants, and on the basis of
country-of-origin consumption and prices.29 Without a global redistributive authority, the international
transfers necessary to make this work seem essentially impossible. The global distributive effect raises
an interesting question: assuming that the bulk of migration implied by the theoretical analysis, and
seen in the applied work, is NorthSouth; the implication of the theoretical and applied work is that
North gains and South loses, and yet in most international fora, it is the South that demands increased
access to Northern labour markets and the North that resists these demands.
Surely at least part of the answer to this question has to do with intra-national distributive effects.
The workhorse model for analysing both the distributive effects and the overall national welfare effects
of migration is the m-factor 1-sector model, commonly in the 2 1 form. Borjas (1995a) provides
a detailed development of welfare analysis using this model. Consistent with Kemps reminder on
how to count migrants in global analysis, Borjas does not count migrant welfare in his evaluation of
the national welfare effects in the USA. The key here is that, as with the analysis of tariffs, the net
redistributive effect of restricting immigration is a deadweight loss triangle (called the immigration
surplus).30 Also, as with tariffs, for plausible levels of liberalization, these triangles are quite small
relative to total national income. Borjas also makes the point that the size of the immigration surplus
is increasing in the magnitude of redistribution. More importantly, for Borjas, this small net gain needs
to be placed in the context of native losses via the actually existing welfare system. That is, to the
extent that immigrants are fiscally a net drain on native income, that loss must be set against the small
immigration surplus. Thus, the small size of the immigration surplus becomes part of the argument for
illiberal policy.
It is interesting to compare this position to the standard position of most economists on international
trade barriers. Trade liberalization, like liberalized immigration, has strong redistributive effects that,
loosely speaking, increase with the gains from trade. These are rarely seen as a problem from the
perspective of normative analysis, with the usual fall back being that modern welfare states in fact carry
out something approximating the appropriate redistribution. Similarly, estimated costs of protection,
and gains from trade, are always small (at least in advanced market economies with relatively wellfunctioning markets for goods and factors). In the face of consistently small static estimates of the
costs of protection, and gains from liberalization, trade economists have shown considerable ingenuity
in finding arguments that produce considerably more sizable gains. The locus classicus of these is
Tullocks (1967) The welfare costs of tariffs, monopolies and theft. In addition to rehearsing many of
the arguments that standard static analysis misses economic gains, Tullock launched the rent-seeking
literature which argued for counting the redistributive rectangles along with the triangles. A common,
completely plausible, claim is that freer trade produces dynamic effects that might well swamp the small
static effects. As economists we are justifiably scornful of attempts to construct general arguments in
favour of trade protection. Nonetheless, even though (as Kemp and Hammond/Sempere among others
show) the structure of gains from liberalization arguments are the same, the same arguments could
be made to argue for larger gains from liberalization via dynamic channels, and the arguments from
a redistributive state are similar, we find all of these elements inverted in the arguments against
liberalization of immigration regimes.

119
5.2 The Peculiar Political Economy of Immigration

Political economy research generally proceeds relative to some good policy outcome, deviations
from which are explained by political economy forces. For economists, this good outcome is
the welfare optimum; for political scientists, it is the democratic optimum. The usual villain, for both,
is special interests (though early pluralist theory saw lobbying as a way of conveying information
about preference intensity rather than distorting outcomes from the democratic optimum). For the case
of immigration, what these optima are is so fraught that most work leaves them implicit.31 Although
nothing like as extensive as research on the political economy of trade, there is a very lively literature
on the political economy of immigration. Much, perhaps most, of the recent work has focused on
identifying the preferences of citizens, a small amount has sought to model equilibrium outcomes as a
function of factor price effects, and a larger sub-literature has focused on the political economic link
between immigration and welfare state provision. We comment briefly on each of these.
It should be clear from the work already surveyed that it is a straightforward task to derive the effects
of immigration on relative wages. Under otherwise standard assumptions, the essential assumption for
generating certain redistributive effects is that the number of factors of production should exceed the
number of sectors. In addition to others, this will be the case in one-sector models with many types of
labour and in specific-factor models (Bilal et al., 2003). Because factor market effects play a large role
in political economy modelling, it is not surprising that a substantial amount of effort has gone into
finding evidence of such effects. The current approach to doing this is to use individual responses in
public opinion polls on questions relating to immigration policy along with information on individual
skill endowments to test for consistency between model predictions and individual evaluations. For
this purpose, endowments are usually considered as more- and less-skilled labour and measured by
education. In this approach, it is common to find that individual preferences on immigration policy are
determined, at least in part, by endowment (Scheve and Slaughter, 2001; ORourke and Sinnott, 2006;
Mayda, 2006). Although this seems sensible, there are at least two problems: first, if the findings of
research on the labour market effects of immigration are correct (i.e. that the labour market effects
are small to zero, even on unskilled natives), it is not clear what we should make of the results from
opinion polls; and, second, it seems likely that, in addition to its relationship to labour market status,
education is related to things like cosmopolitanism that affect tolerance, or to training in economics that
predisposes people to more liberal attitudes on globalization in general and immigration in particular
(Hainmueller and Hiscox, 2007). As the previous section noted, another channel via which immigration
affects native economic interests is the welfare state/fiscal redistribution channel. Recent research on
individual attitudes that seeks to take such considerations into account is characterized by mixed results.
For example Facchini and Mayda (2009) find that, although both labour market and redistributive effects
are significant, the latter are stronger; but Hainmueller and Hiscox (2010) find that neither of these
channels are unambiguously supported. Finally, although labour market effects (to the extent that they
can be effectively identified with education-based endowments) and redistributive effects surely matter,
there is evidence that compositional amenities/social interaction effects may be even more important
(Citrin et al., 1997; Dustmann and Preston, 2007; Card et al., 2009).32
Although the findings of research on both labour market effects and citizen attitudes are such
as to lead us to doubt that such effects are the primary causal factor in determining immigration
policy, there is still a significant literature seeking to analyse immigration policy in precisely this
way. As in the literature on the political economy of international trade, there are two broad classes
of political institution that are considered in solving for political economic equilibrium: referendum
models and lobbying models. It is probably most useful to think of the single issue referendum model
as a reduced form for considering the general effect of public preferences on immigration policy.33
Blacks (1948) median voter theorem, combined with the auxiliary assumptions that the immigration
issue is one dimensional (e.g. size of quota) and the preferences identified by factor ownership are

120
GASTON AND NELSON
single peaked over that dimension, yields a simple prediction about the link between preferences
and political outcomes (e.g. Benhabib, 1996; Flores, 1997; de Melo et al., 2001).34 A small number
of studies have attempted to frame accounts of contemporary immigration policy outcomes in these
terms (de Melo et al., 2004; Facchini and Mayda, 2008; Miguet, 2008). In addition, Goldin (1994)
and Timmer and Williamson (1998) frame accounts of late-19th early 20th century US immigration
policy in these same terms. It is also possible to rationalize policy via lobbying models (Amegashi,
2004; Facchini and Willmann, 2005; Schwellnus, 2008) and systematic empirical work is presented
suggesting consistency between immigration policy outcomes and the predictions of these models
(Facchini and Mayda, 2008; Facchini et al., 2008). The Facchini and Mayda paper is particularly
interesting in its presentation of both referendum and lobbying models and an attempt to provide a
link between these modes of policy determination. A fundamental problem with the lobbying models
is that, unlike lobbying on trade policy, the actual patterns of lobbying are not particularly consistent
with the predictions of the model. Although there certainly are influential economic interests involved
in lobbying (e.g. Western agricultural interests), these groups do not reflect the broad, economy-wide
interests implied by claims about national level labour market effects. Instead, national level groups tend
to be religious and environmental (Gimpel and Edwards, 1999). Ultimately, for all the convenience in
linking the material conditions of the economy to political outcomes, the empirical weakness of the core
relationship between immigration and labour market outcomes renders suspect the claims of this line of
research.35
The presence of a redistributive welfare state can change both the welfare optimum and individual
political economic calculation (Wildasin, 1994; Wellisch and Wildasin, 1996; Wellisch and Walz, 1998;
Gatsios et al., 1999; Razin and Sadka, 2001; Razin et al., 2005). The basic question addressed by this
body of research is clear: does admitting immigrants (especially poor immigrants) lead to a reduction
in welfare state effort? The overwhelming majority of papers on this topic use some version of a
referendum as the political economic mechanism and assume that immigrants receive immediate access
to full welfare state benefits. Given the well-known problems with spatial voting models in higher
dimensions, these models all rely on relatively special assumptions about sequencing of votes on issues
and admission. Partly as a result of such structure, and partly given the mix of static and dynamic
structures, the theoretical models yield a large range of results (Cukierman et al., 1994; Mazza and Van
Winden, 1996; Scholten and Thum, 1996; Flores, 1997; Cremer and Pestieau, 1998; Haupt and Peters,
1998, 2003; Michel et al., 1998; Razin and Sadka, 1999, 2001; Kemnitz, 2002; Razin et al., 2002;
Hansen, 2003; Dolmas and Huffman, 2004; Leers et al., 2004; Thum, 2004; Mayr, 2007; Facchini and
Mayda, 2008). What little systematic empirical research exists on this topic tends to find that increased
immigration from relatively poor countries is associated with lower public support for the welfare state
and lower welfare state effort (Razin et al., 2002; Hanson et al., 2007; Facchini and Mayda, 2008; Eger,
2010).36
Unlike the case of trade, it turns out to be considerably more difficult to rationalize immigration
policy in terms of straightforward models that run from factor ownership to preferences over policy
to policy outcomes. It seems an unavoidable conclusion that the social fact of immigrant differences
from the native community plays a major role in the determination of individual attitudes and the
politics of immigration. We have already commented several times on the role of these compositional
externalities on preferences. We close this survey by taking note of an interesting research programme
developed by John Roemer and colleagues that seeks to explicitly build these considerations into
formal political economy models (Roemer and Van Der Straeten, 2005, 2006; Lee and Roemer, 2006;
Woojin Lee et al., 2006; Roemer et al., 2007). This is hardly the last word on the political economy of
immigration policy, but it is does suggest a promising avenue for both theoretical and empirical research
in the future. One way of teasing out the distinctive elements of immigration policy is via explicit
comparison to trade policy (Greenaway and Nelson, 2006, 2010; Hatton and Williamson, 2007; Mayda,
2008).

121
6. Concluding Observations
The concern about whether immigration adversely affects the labour market outcomes of native workers
is an issue of contemporary concern for most wealthy countries. In these countries, any concerns about
the growing trade with developing countries have been eclipsed by the feared impact of immigration
of unskilled workers from those countries on the economic welfare of domestic less-skilled workers.
The theoretical and empirical literature on the effects of immigration on labour market outcomes
is immense. Despite the popular belief that immigrants harm wage and employment opportunities
of natives, the overwhelming majority of the economics literature does not lend support to such a
conclusion. Notwithstanding the recent negative estimates produced by George Borjas, what the first
part of this review concluded is that although there may well be negative effects on migrants of the
same origin and vintage, and, possibly, on a relatively small, and shrinking, group of native high
school dropouts, adverse labour market consequences of contemporary immigration are minuscule at
most.
To the extent that there is a dispute in the economics profession concerning the case of immigration,
it revolves around the framework to be used for evaluating the results of the empirical work, and here
the division is very much between labour and trade economists. We argued that the sole substantive
difference between labour and trade economists relates to the dimensionality of the model used to
evaluate the results with labour economists preferring an m-factor 1-final good model and trade
economists preferring an m n good model. The essential point is that a one good model does
not allow for changes in the composition of output and forces all adjustment onto factor returns,
whereas a multi-good model can exhibit states of FPI where all the adjustment occurs through output
changes.
The second part of this review examined the links between goods and factor trade. Although there
is some degree of ambivalence in the theoretical literature, the empirical evidence seems to point to
trade and labour migration as being complementary. The existence of migrants networks, and their
role in bridging information asymmetries, may help explain why one might expect migration and trade
to be complements rather than substitutes. Most of the focus in the economics literature has been on
factor migration, but migrants are people (consumers, voters, welfare recipients, etc.), and this has
implications for trade and the impact on domestic economies. The exact relationship between trade and
migration is potentially important. For example, if the relationship were a complementary one, and if
policy makers were to view further reductions in trade barriers as improbable, then in order to facilitate
trade, liberalizing migration might make economic sense. On the other hand, the concern in wealthy
countries about modern day immigration is that it is largely unskilled in nature. The perception is that
such immigration is highly redistributive, the costs of which may more than offset what may very well
be a small immigration surplus.
Overall, we argue that the political economy of immigration policy cannot be understood as being
about labour market effects. What is required is a broader understanding of the politics of the welfare
state and cultural adjustment to change. In terms of the political economy, there appears to be a
strong link between poor macroeconomic circumstances, hardening attitudes towards immigrants and
the attractiveness of restrictive policies. The politics of immigration is unlike the politics of trade (with
its implied negotiability). Rather than the pure economic self-interest of identifiable groups, public
attitudes play an important role in setting the terms of the politics of immigration. In seems to us that
the debate over immigration will remain highly contestable into the future.
Acknowledgements
The authors thank the editor, Colin Roberts, and two anonymous referees for useful feedback. The usual
caveats apply.

122
GASTON AND NELSON
Notes
1. The academic literature on immigration is so large, and so well served by surveys, that one could easily
write a survey of the surveys. Most closely related to the approach taken here, there have been several
surveys from a trade theoretic perspective. Of note are: Ethier (1986, 1996), Razin and Sadka (1994),
Venables (1999), Dustmann et al. (2008) and Hanson (2009). Also notable is Wongs (1995) textbook
on international trade that seeks to incorporate factor mobility as an essential element. These all focus
virtually exclusively on the theory; in this paper we seek to incorporate coverage of relevant empirical
work.
2. In addition to the papers by OP (2008, 2010) that we discuss here, other papers include, Suen (2000),
DAmuri et al. (2010), Felbermayr et al. (2010) and Raphael and Smolensky (2009a, 2009b). These
papers work with data from a variety of countries and all find negative effects of immigration on the
lowest education cell, although none find large effects. Another group of papers apply the same method
of working at the national level on skill cells, but define those cells in terms of occupation rather than
education. As with education-experience, the idea here is that people are not able to change occupation
readily in response to shocks. This permits identification of the labour market effects of immigration if
immigrants are distributed unevenly across occupations and over time. Camarota (1997) and Card (2001)
both focus on occupation, but identify effects from variance across regions in a single year. Friedberg
(2001) looks at the unexpected 19901994 shock to the Israeli labour market of Russian immigrants
identifying effects from occupation level data (using Russian occupations as an instrument) and finds
essentially no effect on Israeli wages. Orrenius and Zavodny (2007) use data on occupation and region
over time to estimate the effects of immigration and find statistically significant, but small effects. It
should be noted that Borjas has produced other papers showing essentially perfect substitutability and
large effects (Aydemir and Borjas, 2007; Borjas et al., 2009).
3. OP (2010), which emphasized imperfect substitutability between natives and migrants and capital
adjustment, whose results were criticized by Borjas et al. (2008) for sensitivity to the way they
construct their four schooling aggregates. In response, OP (2008) show: first, that the problem is less
the construction of the variables than the use of so many dummy variables that results in insignificant
results; and, second, argue that the four education groups should be tested against the more standard two
groups applied in empirical labour economics outside the economics of immigration. Thus, although
the results of this paper seem unlikely to be the last word on this topic, at this point it does seem to
be fair to conclude that the Borjas (2003) results will continue to be seen as extreme. Recent papers by
Card (2009, 2010) also pursue these issues, arguing in favour of the usefulness of local labour market
effect, finite substitutability between natives and immigrants, elastic supply of capital, all leading to
quite modest effects of immigration on native wage inequality.
4. Recall Borjas use of decadal data for his analysis, which makes the adjustment of capital to immigration
or labour supply shocks more likely.
5. As Jones (1970) and Ruffin (1984) stress, the parallel is less than perfect if one countrys technological
advantage is identical in both sectors. In this case, in the mobile factor version, the country with superior
technology will export the good whose production uses the mobile factor intensively, whereas in the
Ricardian model with factor mobility, there will be no trade (i.e. autarchic prices between the countries
will be the same if one countrys technology is uniformly superior in both sectors).
6. Note that we have drawn the figure under the assumption that good 1 is capital intensive. Thus, if p =
P2 /P1 and = w/r, we know from the StolperSamuelson theorem that the technologically determined
relationship between these two variables is positively sloped.
7. An early, and important, criticism of Mundells analysis argued that, if tariffs generate the wedge between
commodity prices, and the payment for the imported factor must be repatriated to the factors Home
country, a wedge will remain driving the economy to specialization and non-equalization (Rakowski,
1970; Flatters, 1972). It is worth making two comments here: first, the factor mobility remains a

8.
9.
10.
11.
12.
13.
14.
15.
123
substitute, just not a perfect substitute; and second, to the extent that immigrants primarily consume
where they work, this criticism is less relevant for the case of immigration.
Markusen and Svensson (1985) show that a higher dimensional generalization of the above case is
available.
Thus, as Horiba (2008) notes, the regions endowments become more similar over time, but this
convergence is slow. Collins et al. (1999) ask a similar set of questions using historical data for the
Atlantic Economy in the period 18701936. They also look at whether quantities of trade and migration
are positively or negatively correlated. If there is a positive correlation, they take that as evidence of
complementarity; if they are negatively correlated, they take that as evidence of substitutability; and if
there is no correlation, they call that a neutral result. As the formal analytics in Horiba suggest, it is far
from clear that these correlations relate to the underlying issue of complementarity in any obvious way.
In any event, the overwhelming number of cases are characterized by neutral results.
For the lack of a relationship between migration and convergence, see Barro and Sala-i-Martin (1991)
and related work by Kim (1998) suggesting an important role for industrial structure, as well as
technological change, in accounting for convergence.
The underlying idea is to treat trade as an input to final GNP using the argument that virtually all goods
in trade must be processed further for final sale. See Kohli (1991).
As the authors suggest, this seems prima facie plausible, i.e. an increase in the factor used intensively in
the exportables sector should, via Rybczynski effects, increase production of exportables and thus trade,
whereas an increase in the factor used intensively in importables should increase Home production of
importables, thus reducing trade. However, it is tricky to know how to evaluate positive immigration of
both labour factors (though the United Kingdom may well be a net exporter of capital).
Immigration, and related issues of inter-regional travel, has been a focus of research using the gravity
model for virtually as long as the gravity model has been applied (e.g. Ravenstein, 1885, 1889; Zipf,
1946). For useful surveys tracing gravity modelling of migration back to the 19th century, see Carrothers
(1956) and Greenwood and Hunt (2003). The majority of this work focuses on inter-regional/intranational migration, but the results are quite consistent with that which focuses on international migration.
For surveys of this work, see Greenwood (1975, 1997) for the case of developed countries, and Lucas
(1997) for less developed countries. Early attempts to derive a gravity model from utility maximizing
fundamentals include Ginsberg (1972) and Smith (1975, 1976).
In the gravity literature on migration, destination GDP is a pull factor and origin GDP is a push factor. In
the theory, because what matters to the potential migrant is income net of costs, the ultimate comparison
is [(wD wO ) C] where the ws are wages in origin and destination and C is the cost of migration
from O to D. It should be clear that the effects of the first two terms enter this analysis symmetrically.
Thus the asymmetry in the results is a puzzle. Among attempts to account for this anomaly are:
poverty constraints in the context of large fixed migration costs and imperfect credit markets (Lopez and
Schiff, 1998; Yang, 2008); age heterogeneity in response to destination restrictions (Hunt, 2006); formal
restrictions operating under political economy constraints (Mayda, 2010); and inappropriate specification
of the econometric form estimated (Grogger and Hanson, 2008).
Beginning with the modern classic Return to Aztlan (Massey et al., 1987), Douglas Massey and his
colleagues have developed an impressive body of research focusing on these networks between Mexico
and the USA (see, e.g. Massey, 1990, 2008; Alarcon, 1992; Massey and Espinosa, 1997; Massey et al.,
1998; Phillips and Massey, 2000; Palloni et al., 2001; Durand and Massey, 2004; Fussell and Massey,
2004). In addition to the massive literature on Mexican migration to the USA, the importance of networks
to the migration decision have been found for many other cases as well; for example, Japanese (Jedlicka,
1979); Italians (Moretti, 1999); Germans (Bauer and Zimmermann, 1997; Wegge, 1998); Hong Kong
Chinese (Siu-Lun Wong and Salaff, 1998); Indians (Banerjee, 1983; Poros, 2002; Harvey, 2008); Turks
(Bocker, 1994, 1995) and Central and Eastern Europeans (Dahinden, 2005; Haug, 2005, 2008; Elrick
and Ciobanu, 2009). For general treatments of sociological theory and methods of network analysis, see

124
16.
17.
18.
19.
20.
21.
22.
23.
GASTON AND NELSON
Wasserman and Faust (1994). Of particular interest to economists is the work of White (1992, 2002)
and Burt (1992, 2000).
Although early work by economists recognized the role of networks (e.g. Nelson, 1959; Rees, 1966),
economists generally came late to the analysis of networks, in general and with specific reference to
migration. However, networks are now an active area of research in economic theory and empirics. For
excellent text treatments see Goyal (2009) and Jackson (2008).
The concerns of social capital theory overlap very strongly with those of network theory. Research on
the social capital generated by groups in general goes back at least to the foundational work of Loury
(1977, 1981). The application to immigrant communities has a long pedigree in sociology. In economics,
research has stressed the role of networks/social capital among immigrants. In particular, see the work
of Borjas and Bronars (1991); Borjas and Trejo (1991); Borjas (1992, 1993, 1994, 1995b, 1998); and
Lazear (1999, 2000).
As Rauch (2001) points out, effective networks need not be immigrant or ethnic networks. Any group
of people that share information and are related by bonds of trust, the violation of which are costly to
members of the network, can serve at least as well. However, immigrant-ethnic networks have served
this purpose historically and, unlike old school tie networks, they are relatively easily identifiable at the
aggregate level.
Although economists tend to stress exclusion from economic benefits (e.g. Greif, 1993), one of the
reasons that ethnic communities play such an important role here (rather than simply repeated interaction
of more-or-less randomly generated networks) is the broader role of social solidarity. This social
solidarity is often linked to distinctiveness relative to the native community induced via common
language and religion, as well as ghettoization and endogamy. Thus, to be excluded from the community
implies substantially higher costs than simple exclusion from trading networks. Epstein and Gang (2006)
develop an interesting analysis of the tension between the benefits of the social network and those of
assimilation in the context of a model of international trade.
Most of the theoretical research on the complements versus substitutes questions abstracts from taste
differences by assuming globally common, homothetic preferences. Once we permit either systematically
different preferences or heterogeneity/monopolistic competition, the analysis becomes more complex.
In the HOS world, the obvious assumption is that natives have a strong preference for their exportable
commodity (thus immigrants carry a stronger preference for the exports of their home country, increasing
the host countrys demand for imports from the immigrants home); however, this pattern of preferences
can yield the Opp et al. (2009) reverse Rybczynski effect. Similarly, once we enter the world of countryspecific varieties of goods, we are in a world where results are sensitive to details of market structure
(Ethier, 1996).
For cultural differences, gravity models have used: language (Boisso and Ferrantino, 1997; Hutchinson,
2002, 2005), and broad measures of cultural difference (Guiso et al., 2009). A number of papers have
used measures of rule of law and other institutions to get at the costs associated with poor enforcement
of contracts (Anderson and Marcouiller, 2002; De Groot et al., 2004; Berkowitz et al., 2006; Turrini
and Van Ypersele, 2006; Nunn, 2007; Ranjan and Lee, 2007; Leeson, 2008; Li and Samsell, 2009).
Starting with Wagner et al. (2002), a number of papers have contained tables reporting estimates of
these elasticities in previously published papers. However, given the range of specifications, countries
analysed, years, and estimation techniques, the value of such an exercise is less than clear. Because, in
all of these tables, each paper is represented by a single pair of elasticities (one for exports, one for
imports), the goal of the authors of the tables is usually to pick the most comparable specifications;
however, because the point of many of the papers is precisely different specifications, this seems an
odd choice. On the other hand, reporting elasticities from widely different specifications and estimation
techniques would make little sense.
There are two somewhat unusual elements of Goulds framework. The first is the use of a specific
functional form for the effect of immigrants on transaction costs which is decreasing at a decreasing

125
rate. Although this permits him to estimate the point at which the positive effect of immigrants on trade
begins to decline, it is also apparently responsible for the sizable difference between Goulds results
and those of other work with otherwise similar specifications. In the event, Gould finds that the effect
of immigrants on exports is exhausted at a quite small level (12,016 immigrants), whereas the effect
on imports is exhausted at a substantially larger level (370,879 immigrants). The second peculiarity,
which a small number of other papers apply, is the use of average length of stay for a given countrys
immigrants in both a linear and a quadratic term. As in the other papers that use these variables, the
effects tend to be small. This is especially the case for the quadratic term, with the result that most
papers end up excluding both of these variables, or including only the linear term. More problematically,
it is not clear what this variable is really supposed to measure in terms of networks and information. In
neither the market creation case nor the market replacement case, as long as the networks are in place,
is there any reason why average length of stay should matter.
24. There are a few closely related papers that should be mentioned in this context. The first is Rauch and
Trindades (2003) investigation of the role of Chinese communities in trade. Rather than looking at the
effect of immigration from a home country on the trade of a host country, Rauch and Trindade ask if
the stock of Chinese in each country affects trade in a dyad. Chinese communities are well known in
the ethnographic and business literatures as actively involved in trade (e.g. Landa, 1994; Weidenbaum
and Hughes, 1996; Liu, 2000, 2001). Thus, Rauch and Trindades interest in the presence of Chinese
immigrant communities in explaining trade in a gravity framework makes a lot of sense. In addition, the
authors use Rauchs (1999) distinction between standardized goods (goods with reference prices), goods
traded on organized exchange and differentiated goods, finding that the effects of Chinese communities
on the latter two categories are economically and statistically more significant than on standardized
goods. Given the other controls, the authors take this as evidence that Chinese communities provide
both market-making and market-replacing services to the countries in which they reside. A second related
paper is Combes et al. (2005), which analyses the effect of migration between French departements
on trade between those departements. Although the analysis uses strictly domestic data, the issues of
theoretical and empirical implementation are identical to the international case. This paper is particularly
notable for the care it takes in developing both a theoretical framework and its explication of the empirical
framework. This paper develops data and analysis considering both immigration networks and networks
of firms, ultimately finding both to be economically and statistically significant. As with Gould, the
effect of immigrant networks is greater on exports than it is on imports. Millimet and Osang (2007)
examine the relationship between intra-national trade and intra-national migration for the USA, though
this paper is primarily interested in analysing the border effect. As in Combes et al., Millimet and
Osangs results strongly support a positive relationship between trade and migration. Another paper
using sub-national data on trade and immigration is Helliwells (1997) analysis of intra-provincial,
intra-state and international (USCanadian) trade and migration. Like Millimet and Osang, Helliwells
main interest is in the border effect, but he also finds strong evidence of a positive link between trade
and migration. Finally, Blanes-Cristobal and Martn-Montaner (2006) examine the effect of migration
on intra-industry trade. Given the usual interpretation of intra-industry trade in terms of monopolistic
competition, this seems a natural development of Rauch (1999) analysis of differentiated products.
Although this paper does not apply gravity methods, the results are broadly consistent with the results
of those papers that do. That is, at least for Spain, immigration is strongly, positively associated with
intra-industry trade.
25. Corruption and low institutional quality would, presumably, also be a problem for the reference country.
There is essentially no evidence of this side of the link given that virtually all of the reference countries
are characterized by globally quite high institutional quality.
26. This is the position that Sidgwick (1891) called cosmopolitan, arguing that it was the only position
really consistent with utilitarianism, but ultimately rejecting as impractical given the political needs
of his country (England) in his time (the late 19th century). Contemporary utilitarians face the same

126
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
GASTON AND NELSON
problem, though the impracticality of the cosmopolitan position tends to run through the welfare state
(not a problem in Sidgwicks time) rather than through the unity of the nation. The same issue faces
any broadly Liberal position (i.e. positions that evaluate policies in terms their effect on individuals)
for example, libertarian and Rawlsian, as well as utilitarian. See Carens (1987) for the argument that
all three of these positions imply a cosmopolitan analysis. Like Sidgwick, Rawls (1999) himself argues
against the free migration position (though he rejects the notion that a Rawlsian analysis implies that
position).
There are, of course, a virtually infinite number of second-best arguments that might be constructed,
as is the case with arguments for globally free trade, but it is in the nature of such arguments that
they involve importing empirical claims of dubious generality to which the policy in question (e.g.
immigration restriction) is never the optimal response.
These results generalize the earlier brain drain literature that focused on migrant sending countries
(Bhagwati and Rodriguez, 1975; Commander et al., 2004).
Although this makes sense from a global welfare perspective, it is interesting to note that scholars like
Walzer (1981) argue that, once a migrant is admitted to membership in a country (whether or not to
formal citizenship), they should receive the benefits of that membership. Although Walzer proceeds from
a communitarian normative foundation, his argument on this issue seems at least plausibly extensible to
liberal analyses.
It is important to understand that, unlike the standard analysis of the tariff, the meaning of these areas
is not straightforward from a welfare perspective. Standard tariff analysis works with the demand curve
for final commodities which, under standard (if empirically dubious) assumptions is directly related to
consumer utility, whereas the labour demand is derived from a production function. The areas under the
labour demand curve are unambiguously related to aggregate income, not directly to welfare.
For economists this is a bit easier because every model has a welfare optimum. However, because the
usefulness of this optimum (usually some version of free mobility) is highly contested, we still tend to
steer away from explicit discussion. See Greenaway and Nelson (2010) for more on this.
This last point is related to the question of whether negative attitudes are causally linked to proximity
to large numbers of immigrants. The results on this question are mixed: Scheve and Slaughter (2001)
find no evidence of such links, whereas Gang et al. (2002) and Hanson et al. (2007) do find such
effects.
Unlike international trade, immigration policy is quite often an issue of general public political discourse.
Furthermore, genuine referenda on the issue have occurred: 1994s Proposition 187 in California
(Calavita, 1996; Tolbert and Hero, 1996; Macdonald and Cain, 1997; Alvarez and Butterfield, 2000;
Lee et al., 2001), whereas in Switzerland immigration was a continuing issue in electoral politics in
the 1990s (de Melo et al., 2004; Miguet, 2008). Although de Melo et al. and Miguet argue that Swiss
electoral politics and outcomes are consistent, broadly speaking, with factor market-based preferences,
the research on Proposition 187 tends to argue that labour market effects are strongly dominated by
broader social attitudes.
Although it is probably easiest to conceive of immigration policy in terms of number of migrants, as
our brief discussion of enforcement issues suggests, there is a parallel political economy dealing with
illegal immigrants. Standard theoretical political economy models have been developed (Hillman and
Weiss, 1999; Nelson and Xu, 2001) to analyse enforcement activity and empirical analyses suggest a
role for political economic forces in determining those policies (Shughart et al., 1986; Davila et al.,
1999; Hanson and Spilimbergo, 2001).
Gaston and Nelson (2000) and Greenaway and Nelson (2010) develop this argument at greater length.
This is consistent with the fact that the standard result in closed economy models of redistribution that
greater inequality should be associated with a bigger, more redistributive state (Meltzer and Richard,
1981) is consistently and decisively rejected in by every attempt to evaluate the model (Harms and Zink,
2003; Alesina and Glaeser, 2004).

127
References
Alarcon, R. (1992) Nortenizacion: self-perpetuating migration from a Mexican town. In J. Bustamente, R.
Hinojosa and C. Reynolds (eds), U.S.-Mexico Relations: Labor Market Interdependence (pp. 302318).
Stanford: Stanford University Press.
Alesina, A. and Glaeser, E.L. (2004) Fighting Poverty in the US and Europe: A World of Difference. Oxford:
Oxford University Press.
Alvarez, R.M. and Butterfield, T.L. (2000) The resurgence of nativism in California? The case of proposition
187 and illegal immigration. Social Science Quarterly 81(1): 167179.
Amegashi, J.A. (2004) A political economy of immigration quotas. Economics of Governance 5(3): 255267.
Anderson, J.E. (2004) Trade and informal institutions. In E.K. Choi and J. Hartigan (eds), Handbook of
International Trade (Vol. II, pp. 279293). Oxford: Blackwell.
Anderson, J.E. and Marcouiller, D. (2002) Insecurity and the pattern of trade: an empirical investigation.
Review of Economics and Statistics 84(2): 342352.
Anderson, J.E. and VanWincoop, E. (2004) Trade costs. Journal of Economic Literature 42(3): 691751.
Anderson, J.E. and Young, L. (2006) Trade and contract enforcement. Contributions in Economic Analysis
& Policy 5(1): Article 30.
Aydemir, A. and Borjas, G.J. (2007) Cross-country variation in the impact of international migration: Canada,
Mexico, and the United States. Journal of the European Economic Association 5(4): 663708.
Bandyopadhyay, S., Coughlin, C.C. and Wall, H.J. (2008) Ethnic networks and U.S. exports. Review of
International Economics 16(1): 199213.
Banerjee, B. (1983) Social networks in the migration process: empirical evidence on chain migration in
India. Journal of Developing Areas 17(2): 185196.
Bardhan, A.D. and Guhathakurta, S. (2004) Global linkages of subnational regions: coastal exports and
international networks. Contemporary Economic Policy 22(2): 225236.
Barro, R.J. and Sala-i-Martin, X. (1991) Convergence across states and regions. Brookings Papers on
Economic Activity (1): 107182.
Bartel, A.P. (1989) Where do the new United States immigrants live. Journal of Labor Economics 7(4):
371391.
Bartel, A.P. and Koch, M.J. (1991) Internal migration of U.S. Immigrants. In J.M. Abowd and R.B.
Freeman (eds), Immigration, Trade, and Labor Markets (pp. 121134). Chicago: University of Chicago
Press/NBER.
Bauer, T. and Zimmermann, K.F. (1997) Network migration of ethnic Germans. International Migration
Review 31(1): 143149.
Benhabib, J. (1996) On the political economy of immigration. European Economic Review 40(9): 1737
1743.
Berkowitz, D., Moenius, J. and Pistor, K. (2006) Trade, law, and product complexity. Review of Economics
and Statistics 88(2): 363373.
Bernard, A.B. and Jensen, J.B. (2000) Understanding increasing and decreasing wage inequality. In R.C.
Feenstra (ed.), Impact of International Trade Wages (pp. 227261). Chicago: University of Chicago
Press.
Bernard, A.B., Redding, S.J., Schott, P.K. and Simpson, H. (2003) Relative wage variation and industry
location. NBER Working Paper 9998.
Bernard, A.B., Redding, S.J., Schott, P.K. and Simpson, H. (2008) Relative wage variation and industry
location in the United Kingdom. Oxford Bulletin of Economics and Statistics 70(4): 431459.
Bernard, A.B., Redding, S.J. and Schott, P.K. (2009) Testing for factor price equality in the presence of
unobserved factor quality differences. NBER Working Paper 8068.
Bertocchi, G. and Strozzi, C. (2008) International migration and the role of institutions. Public Choice
137(12): 81102.
Bhagwati, J. and Rodriguez, C. (1975) Welfare-theoretical analyses of the brain drain. Journal of Development
Economics 2: 195221.
Bilal, S., Grether, J.-M. and de Melo, J. (2003) Attitudes towards immigration: a trade-theoretic approach.
Review of International Economics 11(2): 253267.
Black, D. (1948) On the rationale of group decision-making. Journal of Political Economy 56(1): 2334.

128
GASTON AND NELSON
Blanchard, O.J. and Katz, L.F. (1992) Regional evolutions. Brookings Papers on Economic Activity (1): 161.
Blanes-Cristobal, J.V. (2004) El nexo entre la inmigracion y el comercio en Espana [The nexus between
immigration and trade in Spain]. Informacion Comercial Espanola Revista de Economa (814): 3948.
Blanes-Cristobal, J.V. (2005) Does immigration help to explain intra-industry trade? Evidence for Spain.
Review of World Economics 141(2): 244270.
Blanes-Cristobal, J.V. (2008) Characteristics of immigrants and bilateral trade. Revista De Economia Aplicada
16(48): 133159.
Blanes-Cristobal, J.V. and Martn-Montaner, J.A. (2006) Migration flows and intra-industry trade adjustments.
Review of World Economics 142(3): 567584.
Bocker, A.G.M. (1994) Chain migration over legally closed borders: settled immigrants as bridgeheads and
gatekeepers. The Netherlands Journal of Social Sciences 30(2): 87106.
Bocker, A.G.M. (1995) Migration networks: Turkish migration to Western Europe. In R. van Erf and
L. Heering (eds), Causes of International Migration. Proceedings of a Workshop (pp. 151173).
Luxembourg: Eurostat.
Boisso, D. and Ferrantino, M. (1997) Economic distance, cultural distance, and openness in international
trade: empirical puzzles. Journal of Economic Integration 12(4): 456484.
Bonacich, E. (1973) Theory of middleman minorities. American Sociological Review 38(5): 583594.
Borjas, G.J. (1987) Self-selection and the earnings of immigrants. American Economic Review 77(4):
531553.
Borjas, G.J. (1992) Ethnic capital and intergenerational mobility. Quarterly Journal of Economics 107(1):
123150.
Borjas, G.J. (1993) The intergenerational mobility of immigrants. Journal of Labor Economics 11(1):
113135.
Borjas, G.J. (1994) Immigrant skills and ethnic spillovers. Journal of Population Economics 7(2): 99118.
Borjas, G.J. (1995a) The economic benefits from immigration. Journal of Economic Perspectives 9(2): 322.
Borjas, G.J. (1995b) Ethnicity, neighborhoods, and human-capital externalities. American Economic Review
85(3): 365390.
Borjas, G.J. (1998) To ghetto or not to ghetto: ethnicity and residential segregation. Journal of Urban
Economics 44(2): 228253.
Borjas, G.J. (2003) The labor demand curve is downward sloping: reexamining the impact of immigration
on the labor market. Quarterly Journal of Economics 118(4): 13351374.
Borjas, G.J. (2006) Native internal migration and the labor market impact of immigration. Journal of Human
Resources 41(2): 221258.
Borjas, G.J. and Bronars, S. (1991) Immigration and the family. Journal of Labor Economics 9(2): 123148.
Borjas, G.J. and Katz, L.F. (2007) The evolution of the Mexican-born workforce in the United States. In
G.J. Borjas (ed.), Mexican Immigration to the United States (pp. 1355). Chicago: University of Chicago
Press/NBER.
Borjas, G.J. and Trejo, S. (1991) Immigrant participation in the welfare system. Industrial & Labor Relations
Review 44(2): 195211.
Borjas, G.J., Freeman, R.B. and Katz, L.F. (1992) On the labor market effects of immigration and trade. In
G.J. Borjas and R.B. Freeman (eds), Immigration and the Work Force (pp. 213244). Chicago: University
of Chicago Press/NBER.
Borjas, G.J., Freeman, R.B. and Katz, L.F. (1997) How much do immigration and trade affect labor market
outcomes? Brookings Papers on Economic Activity (1): 190.
Borjas, G.J., Grogger, J. and Hanson, G.H. (2008) Imperfect substitution between immigrants and natives: a
reappraisal. NBER Working Paper 13887.
Borjas, G.J., Grogger, J. and Hanson, G.H. (2010) Immigration and the economic status of African American
men. Economica 77(306): 255282.
Boyd, M. (1989) Family and personal networks in international migration: recent developments and new
agendas. International Migration Review 23(3): 638670.
Brecher, R.A. and Choudhri, E.U. (1993) Some empirical support for the Heckscher-Ohlin model of
production. Canadian Journal of Economics 26(2): 272285.
Briant, A., Combes, P.-P. and Lafourcade, M. (2009) Product complexity, quality of institutions and the
pro-trade effect of immigrants. Paris School of Economics Working Paper 2009 06.

129
Bruder, J. (2004) Are trade and migration substitutes or complements? The case of Germany, University of
Rostock Working Paper 19701998.
Bryant, J., Genc, M. and Law, D. (2004) Trade and migration to New Zealand. Working Paper Series 04/18,
New Zealand Treasury.
Burgess, D.F. (1974) Production theory and derived demand for imports. Journal of International Economics
4(2): 103117.
Burt, R.S. (1992) Structural Holes: The Social Structure of Competition. Cambridge, MA: Harvard University
Press.
Burt, R.S. (2000) The network structure of social capital. In R.I. Sutton and B.M. Staw (eds), Research in
Organizational Behavior (pp. 345423). Greenwich, CT: JAI Press.
Calavita, K. (1996) The new politics of immigration: Balanced-budget conservatism and the symbolism
of proposition 187. Social Problems 43(3): 284305.
Camarota, S.A. (1997) The effect of immigrants on the earnings of low-skilled native workers: evidence
from the June 1991 current population survey. Social Science Quarterly 78(2): 417431.
Card, D. (1990) The impact of the Mariel boatlift on the Miami labor-market. Industrial & Labor Relations
Review 43(2): 245257.
Card, D. (2001) Immigrant inflows, native outflows, and the local labor market impacts of higher immigration.
Journal of Labor Economics 19(1): 2264.
Card, D. (2009) Immigration and inequality. American Economic Review 99(2): 121.
Card, D. (2010) Local labor-market adaptation to increased immigration. In C. Brown, B. Eichengreen and
M. Reich (eds), Labor in the Era of Globalization (pp. 414443). New York: Cambridge University
Press.
Card, D. and DiNardo, J.E. (2000) Do immigrant inflows lead to native outflows? American Economic
Review 90(2): 360367.
Card, D. and Lewis, E. (2007) The diffusion of Mexican immigrants during the 1990s: explanational
and impacts. In G.J. Borjas (ed.), Mexican Immigration to the United States (pp. 193277). Chicago:
University of Chicago Press/NBER.
Card, D., Dustmann, C. and Preston, I. (2009) Immigration, wages, and compositional amenities. NBER
Working Paper 15521.
Carens, J.H. (1987) Aliens and citizensthe case for open borders. Review of Politics 49(2): 251
273.
Carrothers, G.A.P. (1956) An historical review of the gravity and potential concepts of human interaction.
Journal of the American Institute of Planners 22(2): 94102.
Ching, H.S. and Chen, L.-L. (2000) Links between emigrants and the home country: the case of trade between
Taiwan and China. In H. Kohno, P. Nijkamp and J. Poot (eds), Regional Cohesion and Competition in
the Age of Globalization. Cheltenham: Edward Elgar.
Citrin, J., Green, D.P., Muste, C. and Wong, C. (1997) Public opinion toward immigration reform: the role
of economic motivations. Journal of Politics 59(3): 858881.
Clark, X., Hatton, T.J. and Williamson, J.G. (2007) Explaining US immigration, 19711998. Review of
Economics and Statistics 89(2): 359373.
Co, C.Y., Euzent, P. and Martin, T. (2004) The export effect of immigration into the USA. Applied Economics
36(6): 573583.
Cohen, A. (1969) Custom and Politics in Urban Africa: A Study of Hausa Migrants in Yoruba Towns. London:
Routledge & Kegan Paul.
Cohen, A. (1971) Cultural strategies in the organization of trading diasporas. In C. Meillassoux (ed.), The
Development of Indigenous Trade and Markets in West Africa (pp. 266278). Oxford: Oxford University
Press.
Collins, W.J., ORourke, K.H. and Williamson, J.G. (1999) Were trade and factor mobility substitutes in
history? In R. Faini, J. deMelo and K.F. Zimmermann (eds), Migration: The Controversies and the
Evidence (pp. 227259). Cambridge: Cambridge University Press.
Combes, P.-P., Lafourcade, M. and Mayer, T. (2003) Can business and social networks explain the border
effect puzzle? CEPR Discussion Paper 3750.
Combes, P.-P., Lafourcade, M. and Mayer, T. (2005) The trade-creating effects of business and social
networks: evidence from France. Journal of International Economics 66(1): 129.

130
GASTON AND NELSON
Commander, S., Kangasniemi, M. and Winters, L.A. (2004) The brain drain: a review of theory and facts.
Brussels Economic Review/Cahiers Economiques de Bruxelles 47(1): 2944.
Cortes, P. (2008) The effect of low-skilled immigration on U.S. prices: evidence from CPI data. Journal of
Political Economy 116(3): 381422.
Courant, P.N. and Deardorff, A.V. (1992) International trade with lumpy countries. Journal of Political
Economy 100(1): 198210.
Cremer, H. and Pestieau, P. (1998) Social insurance, majority voting and labor mobility. Journal of Public
Economics 68(3): 397420.
Cukierman, A., Hercowitz, Z. and Pines, D. (1994) The political economy of immigration. Foerder Institute
for Economic Research Working Paper 17/93.
Curtin, P.D. (1984) Cross-Cultural Trade in World History. Cambridge, New York: Cambridge University
Press.
DAmuri, F., Ottaviano, G.I.P. and Peri, G. (2010) The labor market impact of immigration in Western
Germany in the 1990s. European Economic Review 54(4): 550570.
Dahinden, J. (2005) Contesting transnationalism? Lessons from the study of Albanian migration networks
from former Yugoslavia. Global Networks 5(2): 191208.
Dahl, G. (2002) Mobility and the return to education: testing a Roy model with multiple markets.
Econometrica 70(6): 23672420.
Davila, A., Pagan, J.A. and Grau, M.V. (1999) Immigration reform, the ins, and the distribution of interior
and border enforcement resources. Public Choice 99(34): 327345.
Davis, D.R. and Weinstein, D.E. (2001) An account of global factor trade. American Economic Review 91(5):
14231453.
de Groot, H.L.F., Linders, G.J., Rietveld, P. and Subramanian, U. (2004) The institutional determinants of
bilateral trade patterns. Kyklos 57(1): 103123.
de Melo, J., Grether, J.-M. and Muller, T. (2001) The political economy of international migration in a
Ricardo-Viner model. In S. Djajic (ed.), International Migration: Trends, Policy, Impact (pp. 4268).
London: Routland.
de Melo, J., Miguet, F. and Muller, T. (2004) The political economy of migration and EU enlargement:
lessons from Switzerland. In H. Berger and T. Moutos (eds), Managing European Union Enlargement
(pp. 129167). Cambridge: MIT Press/CESifo.
Dixit, A.K. (2003a) On modes of economic governance. Econometrica 71(2): 449481.
Dixit, A.K. (2003b) Trade expansion and contract enforcement. Journal of Political Economy 111(6):
12931317.
Dixit, A.K. (2004) Lawlessness and Economics: Alternative Modes of Governance. Princeton, NJ: Princeton
University Press.
Dixit, A.K. (2009) Governance institutions and economic activity. American Economic Review 99(1): 5
24.
Dixit, A.K. and Woodland, A.D. (1982) The relationship between factor endowments and commodity trade.
Journal of International Economics 13(34): 201214.
Dollar, D., Wolff, E.N. and Baumol, W. (1988) The factor price equalization model and industry
labor productivity: an empirical test across countries. In R.C. Feenstra (ed.), Empirical Methods for
International Trade (pp. 2347). Cambridge: MIT Press.
Dolmas, J. and Huffman, G.W. (2004) On the political economy of immigration and income redistribution.
International Economic Review 45(4): 11291168.
Dunlevy, J.A. (2006) The influence of corruption and language on the protrade effect of immigrants: evidence
from the American states. Review of Economics and Statistics 88(1): 182186.
Dunlevy, J.A. and Hutchinson, W.K. (1999) The impact of immigration on American import trade in the
late nineteenth and early twentieth centuries. Journal of Economic History 59(4): 10431062.
Durand, J. and Massey, D.S. (2004) Crossing the Border: Research from the Mexican Migration Project. New
York: Russell Sage Foundation.
Dustmann, C. and Preston, I.P. (2007) Racial and economic factors in attitudes to immigration. B E Journal
of Economic Analysis & Policy 7(1).
Dustmann, C., Glitz, A. and Frattini, T. (2008) The labour market impact of immigration. Oxford Review of
Economic Policy 24(3): 478495.

131
Eger, M.A. (2010) Even in Sweden: the effect of immigration on support for welfare state spending. European
Sociological Review 26(2): 203217.
Elrick, T. and Ciobanu, O. (2009) Migration networks and policy impacts: insights from Romanian-Spanish
migrations. Global Networks 9(1): 100116.
Epstein, G.S. and Gang, I.N. (2006) Ethnic networks and international trade. In F. Foders and R.J.
Langhammer (eds), Labor Mobility and the World Economy (pp. 85103). Berlin: Springer.
Ethier, W.J. (1986) International trade theory and international migration. In O. Stark (ed.), Migration,
Human Capital and Development (pp. 2774). Greenwich: JAI Press.
Ethier, W.J. (1996) Theories about trade liberalisation and migration: substitutes or complements? In P.J.
Lloyd and L. Williams (eds), International Trade and Migration in the APEC Region (pp. 5068).
Melbourne: Oxford University Press.
Facchini, G. and Mayda, A.M. (2008) From individual attitudes towards migrants to migration policy
outcomes: theory and evidence. Economic Policy (56): 65 713.
Facchini, G. and Mayda, A.M. (2009) Does the welfare state affect individual attitudes toward immigrants?
Evidence across countries. Review of Economics and Statistics 91(2): 295314.
Facchini, G. and Willmann, G. (2005) The political economy of international factor mobility. Journal of
International Economics 67(1): 201219.
Facchini, G., Mayda, A.M. and Mishra, P. (2008) Do interest groups affect US immigration policy? CEPR
Discussion Paper 6898.
Felbermayr, G.J., Geis, W. and Kohler, W. (2010) Restrictive immigration policy in Germany: pains and
gains foregone? Review of World Economics 146(1): 121.
Flatters, F. (1972) Commodity price equalization: note on factor mobility and trade. American Economic
Review 62(3): 473476.
Flores, O. (1997) The political economy of immigration quotas. Atlantic Economic Journal 25(1): 5059.
Frey, W.H. and Liaw, K.-L. (1998) The impact of recent immigration on population redistribution within the
United States. In J.P. Smith and B. Edmonston (eds), The Immigration Debate: Studies on the Economic,
Demographic, and Fiscal Effects of Immigration (pp. 388448). Washington, DC: National Academy
Press.
Friedberg, R.M. (2001) The impact of mass migration on the Israeli labor market. Quarterly Journal of
Economics 116(4): 13731408.
Frydman, C. and Saks, R.E. (2007) Historical trends in executive compensation, 19362003. Journal of
Economic History 67(2): 520521.
Fussell, E. and Massey, D.S. (2004) The limits to cumulative causation: international migration from Mexican
urban areas. Demography 41(1): 151171.
Gallardo-Sejas, H., Pareja, S.-G., Llorca-Vivero, R. and Martinez-Serrano, J. (2006) Determinants of
European immigration: a cross-country analysis. Applied Economics Letters 13(12): 769773.
Gandal, N., Hanson, G.H. and Slaughter, M.J. (2004) Technology, trade, and adjustment to immigration in
Israel. European Economic Review 48(2): 403428.
Gang, I.N., Rivera-Batiz, F. and Yun, M.-S. (2002) Economic strain, ethnic concentration and attitudes
towards foreigners in the European Union. 578 IZA Discussion Paper.
Gaston, N. and Nelson, D.R. (2000) Immigration and labour market outcomes in the United States: a
political-economy puzzle. Oxford Review of Economic Policy 16(3): 104114.
Gaston, N. and Nelson, D.R. (2002) The employment and wage effects of immigration: trade and labour
economics perspectives. In D. Greenaway, R. Upward and K. Wakelin (eds), Trade, Investment, Migration
and Labour Market Adjustment (pp. 201235). Basingstoke, UK: Palgrave/IEA.
Gaston, N. and Nelson, D.R. (2011) International migration. In D.M. Bernhofen, R. Falvey, D.
Greenaway and U. Kreickemeier (eds), Handbook of International Trade. Basingstoke, UK: Palgrave
Macmillan.
Gatsios, K., Hatzipanayotou, P. and Michael, M.S. (1999) International migration, the provision of public
goods, and welfare. Journal of Development Economics 60(2): 559575.
Geertz, C. (1963) Peddlers and Princes; Social Change and Economic Modernization in Two Indonesian
Towns. Chicago: University of Chicago Press.
Geertz, C. (1978) Bazaar economy: information and search in peasant marketing. American Economic Review
68(2): 2832.

132
GASTON AND NELSON
Ghatak, S., Silaghi, M.I.P. and Daly, V. (2009) Trade and migration flows between some CEE countries and
the UK. Journal of International Trade & Economic Development 18(1): 6178.
Gimpel, J.G. and Edwards, J.R. (1999) The Congressional Politics of Immigration Reform. Boston: Allyn and
Bacon.
Ginsberg, R.B. (1972) Incorporating causal structure and exogenous information with probabilistic models:
with special reference to choice, gravity, migration and Markov chains. Journal of Mathematical
Sociology 2: 83104.
Girma, S. and Yu, Z. (2002) The link between immigration and trade: evidence from the United Kingdom.
Weltwirtschaftliches Archiv-Review of World Economics 138(1): 115130.
Goldin, C. (1994) The political economy of immigration restriction in the US. In C. Goldin and G. Liebcap
(eds), The Regulated Economy: A Historical Approach to Political Economy (pp. 223275). Chicago:
University of Chicago Press.
Gould, D.M. (1994) Immigrant links to the home country: empirical implications for United States bilateral
trade flows. Review of Economics and Statistics 76(2): 302316.
Goyal, S. (2009) Connections: An Introduction to the Economics of Networks. Princeton: Princeton University
Press.
Granovetter, M. (1973) Strength of weak ties. American Journal of Sociology, 78(6): 13601380.
Granovetter, M. (1983) The strength of weak ties revisited. In R. Collins (ed.) Sociological Theory-1983
(pp. 201233). San Francisco: Jossey Bass.
Granovetter, M. (2005) The impact of social structure on economic outcomes. Journal of Economic
Perspectives 19(1): 3350.
Greenaway, D. and Nelson, D.R. (2006) The distinct political economics of trade and migration policy:
through the window of endogenous policy models, with a focus on North America. In F. Foders and
R.J. Langhammer (eds), Labor Mobility and the World Economy (pp. 295327). Berlin: Springer.
Greenaway, D. and Nelson, D.R. (2010) The politics of (anti-) globalization: what do we learn from simple
models? In N. Gaston and A. Khalid (eds), Globalization and Economic Integration: Winners and Losers
in the Asia-Pacific (pp. 6992). Cheltenham: Elgar.
Greenwood, M.J. (1975) Research on internal migration in United States: survey. Journal of Economic
Literature 13(2): 397433.
Greenwood, M.J. (1997) Internal migration in developed countries. In M.R. Rosenzweig and O. Stark (eds),
Handbook of Population and Family Economics (pp. 647720). Amsterdam: Elsevier.
Greenwood, M.J. and Hunt, G.L. (2003) The early history of migration research. International Regional
Science Review 26(1): 337.
Greif, A. (1989) Reputation and coalitions in medieval trade: evidence on the Maghribi traders. Journal of
Economic History 49(4): 857882.
Greif, A. (1991) The organization of long-distance trade: reputation and coalitions in the Geniza documents
and Genoa during the 11th-century and 12th-century. Journal of Economic History 51(2): 459462.
Greif, A. (1993) Contract enforceability and economic institutions in early trade: the Maghribi traders
coalition. American Economic Review 83(3): 525548.
Greif, A. (1997) Contracting, enforcement, and efficiency: economics beyond the law. Annual World Bank
Conference on Development Economics 1996: 239278.
Grogger, J. and Hanson, G.H. (2008) Income maximization and the selection and sorting of international
migrants. NBER Working Paper 13821.
Guiso, L., Sapienza, P. and Zingales, L. (2009) Cultural biases in economic exchange? Quarterly Journal of
Economics 124(3): 10951131.
Gurak, D.T. and Caces, F. (1992) Migration networks and the shaping of migration systems. In M. Kritz, L.L.
Lin and H. Zlotnik (eds), International Migration Systems: A Global Approach (pp. 150176). Oxford:
Oxford University Press.
Gurak, D.T. and Kritz, M.M. (2000) The interstate migration of US immigrants: individual and contextual
determinants. Social Forces 78(3): 10171039.
Hainmueller, J. and Hiscox, M.J. (2007) Educated preferences: explaining attitudes toward immigration in
Europe. International Organization 61(2): 399442.
Hainmueller, J. and Hiscox, M.J. (2010) Attitudes toward highly skilled and low skilled immigration:
evidence from a survey experiment. American Political Science Review 104(1): 6184.

133
Hamilton, B. and Whalley, J. (1984) Efficiency and distributional implications of global restrictions on labor
mobility calculations and policy implications. Journal of Development Economics 14(12): 6175.
Hammond, P.J. and Sempere, J. (2006) Gains from trade versus gains from migration: what makes them so
different? Journal of Public Economic Theory 8(1): 145170.
Hansen, J.D. (2003) Immigration and income redistribution in welfare states. European Journal of Political
Economy 19(4): 735746.
Hanson, G.H. (2009) The economic consequences of international migration. Annual Review of Economics
1: 179208.
Hanson, G.H. and Slaughter, M.J. (2002) Labor market adjustment in open economies: evidence from US
states. Journal of International Economics 57(1): 329.
Hanson, G.H. and Spilimbergo, A. (2001) Political economy, sectoral shocks, and border enforcement.
Canadian Journal of Economics 34(3): 612638.
Hanson, G.H., Scheve, K. and Slaughter, M.J. (2007) Public finance and individual preferences over
globalization strategies. Economics and Politics 19(1): 133.
Harms, P. and Zink, S. (2003) Limits to redistribution in a democracy: a survey. European Journal of Political
Economy 19(4): 651668.
Harrigan, J. (1995) Factor endowments and the international location of production econometric evidence
for the OECD, 19701985. Journal of International Economics 39(12): 123141.
Harrigan, J. (1997) Technology, factor supplies, and international specialization: estimating the neoclassical
model. American Economic Review 87(4): 475494.
Harvey, W.S. (2008) Strong or weak ties? British and Indian expatriate scientists finding jobs in Boston.
Global Networks 8(4): 453473.
Hatton, T.J. and Williamson, J.G. (2007) A dual policy paradox: why have trade and immigration policies
always differed in labor-scarce economies? In T.J. Hatton, K.H. ORourke and A.M. Taylor (eds), The
New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson (pp. 217240). Cambridge:
MIT Press.
Haug, S. (2005) East-west migration from central and eastern Europe to Germany: data sets, migration models
and predication of migration potential. In K. Slany (ed.), International Migration. A Multidimensional
Analysis (pp. 191215). Krakow: AGH University of Science and Technology.
Haug, S. (2008) Migration networks and migration decision-making Journal of Ethnic and Migration Studies
34(4): 585605.
Haupt, A. and Peters, W. (1998) Public pensions and voting on immigration. Public Choice 95(34): 403
413.
Haupt, A. and Peters, W. (2003) Voting on public pensions with hands and feet. Economics of Governance
4(1): 5780.
Head, K. and Ries, J. (1998) Immigration and trade creation: econometric evidence from Canada. Canadian
Journal of Economics 31(1): 4762.
Helliwell, J.F. (1997) National borders, trade and migration. Pacific Economic Review 2(3): 165185.
Helliwell, J.F. (1998) How Much do National Borders Matter? Washington, DC: Brookings Institution Press.
Herander, M.G. and Saavedra, L.A. (2005) Exports and the structure of immigrant-based networks: the role
of geographic proximity. Review of Economics and Statistics 87(2): 323335.
Hijzen, A. and Wright, P.W. (2010) Migration, trade and wages. Journal of Population Economics 23(4):
11891211.
Hillman, A.L. and Weiss, A. (1999) A theory of permissible illegal immigration. European Journal of Political
Economy 15(4): 585604.
Hong, T.C. and Santhapparaj, A.S. (2006) Skilled labor immigration and external trade in Malaysia: a pooled
data analysis Perspectives on Global Development and Technology 5(4): 351366.
Horiba, Y. (2008) U.S. Interregional migration and trade. Osaka Economic Papers 58(2): 159171.
Horiba, Y. and Kirkpatrick, R.C. (1983) United States north-south labor migration and trade. Journal of
Regional Science 23(1): 93103.
Hugo, G. (1981) Village-community ties, village norms, and ethnic and social networks: a review
of the evidence from the third world. In G. DeJong and R. Gardner (eds), Migration Decision
Making: Multidisciplinary Approaches to Microlevel Studies in Developed and Developing Countries
(pp. 186225). New York: Pergamon Press.

134
GASTON AND NELSON
Hunt, J. (2006) Staunching emigration from East Germany: age and the determinants of migration. Journal
of the European Economic Association 4(5): 10141037.
Hutchinson, W.K. (2002) Does ease of communication increase trade? Commonality of language and bilateral
trade. Scottish Journal of Political Economy 49(5): 544556.
Hutchinson, W.K. (2005) Linguistic distance as a determinant of bilateral trade. Southern Economic Journal
72(1): 115.
Hutchinson, W.K. and Dunlevy, J.A. (2001) The pro-trade effects of immigration on American exports during
the period 1870 to 1910. Vanderbilt University Working Paper 01-W25.
Jackson, M.O. (2008) Social and Economic Networks. Princeton: Princeton University Press.
Jansen, M. and Piermartini, R. (2009) Temporary migration and bilateral trade flows. World Economy 32(5):
735753.
Jedlicka, D. (1979) Opportunities, information networks and international migration streams. Social Networks
1(3): 277284.
Jiang, S. (2007) Immigration, information and trade margins. Working Paper 200716, Department of
Economics, University of Calgary.
Jones, R.W. (1967) International capital movements and theory of tariffs and trade. Quarterly Journal of
Economics 81(1): 138.
Jones, R.W. (1970) The role of technology in the theory of international trade. In R. Vernon (ed.), The
Technology Factor in International Trade (pp. 7392). New York: Columbia University Press/NBER.
Kandogan, Y. (2009) Immigrants, cross-cultural communication and export performance: the Swiss case.
European Journal of International Management 3(3): 393410.
Karemera, D., Oguledo, V.I. and Davis, B. (2000) A gravity model analysis of international migration to
North America. Applied Economics 32(13): 17451755.
Kemnitz, A. (2002) On the political economy of low skilled immigration and the welfare state. International
Tax and Public Finance 9(4): 423434.
Kemp, M.C. (1993) Gain from international trade and investment: a neo-Heckscher-Ohlin approach. American
Economic Review 56(4): 788809.
Kemp, M.C. (1993) The welfare gains from international migration. Keio Economic Studies 30(1): 15.
Kim, S. (1998) Economic integration and convergence: U.S. regions, 18401990. Journal of Economic
History 58(3): 659683.
Kim, S. (1999) Regions, resources, and economic geography: sources of US regional comparative advantage,
18801987. Regional Science and Urban Economics 29(1): 132.
Kohli, U. (1991) Technology, Duality, and Foreign Trade: The GNP Function Approach to Modeling Imports
and Exports. Ann Arbor: University of Michigan Press.
Kohli, U. (1993) International labor mobility and the demand for imports. Swiss Journal of Economics and
Statistics 129: 547561.
Kohli, U. (1999) Trade and migration: a production theory approach. In R. Faini, J. de Melo and K.F.
Zimmermann (eds), Migration: The Controversies and the Evidence. Cambridge: Cambridge University
Press.
Kohli, U. (2002) Migration and foreign trade: further results. Journal of Population Economics 15(2):
381387.
Kritz, M.M. and Gurak, D.T. (2001) The impact of immigration on the internal migration of natives and
immigrants. Demography 38(1): 133145.
Landa, J.T. (1981) A theory of the ethnically homogeneous middleman group: an institutional alternative to
contract law. Journal of Legal Studies 10(2): 348362.
Landa, J.T. (1994) Trust, Ethnicity, and Identity: Beyond the New Institutional Economics of Ethnic Trading
Networks, Contract Law, and Gift-Exchange. Ann Arbor: University of Michigan Press.
Layard, R.G., Blanchard, O.J., Dornbusch, R. and Krugman, P.R. (1992) East-West Migration: The
Alternatives. Cambridge, MA: MIT Press.
Lazear, E.P. (1999) Culture and language. Journal of Political Economy 107(6): S95S126.
Lazear, E.P. (2000) Diversity and immigration. In G.J. Borjas (ed.), Issues in the Economics of Immigration
(pp. 117142). Chicago: University of Chicago Press/NBER.
Leamer, E.E. (1995) The Heckscher-Ohlin Model in Theory and Practice. Princeton, NJ: International Finance
Section, Department of Economics, Princeton University.

135
Lee, W. and Roemer, J.E. (2006) Racism and redistribution in the United States: a solution to the problem
of American exceptionalism. Journal of Public Economics 90(67): 10271052.
Lee, Y.T., Ottati, V. and Hussain, I. (2001) Attitudes toward illegal immigration into the United States:
California proposition 187. Hispanic Journal of Behavioral Sciences 23(4): 430443.
Lee, W., Roemer, J.E. and Van Der Straeten, K. (2006) Racism, xenophobia, and redistribution. Journal of
the European Economic Association 4(23): 446454.
Leers, T., Meijdam, L. and Verbon, H.A.A. (2004) Ageing, migration and endogenous public pensions.
Journal of Public Economics 88(12): 131159.
Leeson, P.T. (2008) How important is state enforcement for trade? American Law and Economics Review
10(1): 6189.
Letouze, E., Purser, M., Rodrguez, F. and Cummins, M. (2009) Revisiting the migration-development nexus:
a gravity model approach. Human Development Research Paper 2009/44.
Lewer, J.J. and Van Den Berg, H. (2008) A gravity model of immigration. Economics Letters 99(1): 164
167.
Lewis, E. (2005) Immigration, skill mix and choice of technique. Federal Reserve Bank of Philidelphia
Working Paper 0508.
Lewis, E. (2008) How did the Miami labor market absorb the Mariel immigrants? Federal Reserve Bank of
Philadelphia Working Paper 043.
Li, S. and Samsell, D.P. (2009) Why some countries trade more than others: the effects of the governance
environment on trade flows. Corporate Governance 17(1): 4761.
Liu, H. (2000) Globalization, institutionalization and the social foundation of Chinese business networks., in
H.W.-C. Yeung and K. Olds (eds), Globalization of Chinese Business Firms (pp. 105125). New York:
St. Martins.
Liu, H. (2001) Social capital and business networking: a case study of modern Chinese transnationalism.
Southeast Asian Studies 39(3): 357381.
Longhi, S., Nijkamp, P. and Poot, J. (2005) A meta-analytic assessment of the effect of immigration on
wages. Journal of Economic Surveys 19(3): 451477.
Lopez, R. and Schiff, M. (1998) Migration and the skill composition of the labour force: the impact of trade
liberalization in LDCs. Canadian Journal of Economics 31(2): 318336.
Loury, G.C. (1977) A dynamic theory of racial income differences. In P.A. Wallace and A.M. LaMond (eds),
Women, Minorities, and Employment Discrimination (pp. 153186). Lexington: DC Heath.
Loury, G.C. (1981) Intergenerational transfers and the distribution of earnings. Econometrica 49(4): 843867.
Lucas, R.E.B. (1997) Internal migration in developing countries. In M.R. Rosenzweig and O. Stark (eds),
Handbook of Population and Family Economics (pp. 721798). Amsterdam: North-Holland.
MacDonald, K. and Cain, B.E. (1997) Nativism, partisanship and immigration: an analysis of prop. 187.
In M.B. Preston, B.E. Cain and S. Bass (eds), Racial and Ethnic Politics in California (Vol. II,
pp. 277304). Berkeley: Institute of Governmental Studies Press.
Markusen, J.R. (1983) Factor movements and commodity trade as complements. Journal of International
Economics 14: 341356.
Markusen, J.R. and Svensson, L.E.O. (1985) Trade in goods and factors with international differences in
technology. International Economic Review 26(1): 175192.
Maskus, K.E. (1991) Comparing international trade data and product and national characteristics data
for the analysis of trade models. In P. Hooper and J.D. Richardson (eds), International Economic
Transactions: Issues in Measurement and Empirical Research (pp. 1756). Chicago: University of
Chicago Press/NBER.
Massey, D.S. (1990) The social and economic origins of migration. Annals AAPSS, (510): 6072.
Massey, D.S. (2008) New Faces in New Places: The Changing Geography of American Immigration. New
York: Russell Sage Foundation.
Massey, D.S. and Espinosa, K.E. (1997) Whats driving Mexico-U.S. migration? A theoretical, empirical,
and policy analysis. American Journal of Sociology, 102(4): 939999.
Massey, D.S., Alarcon, R., Durand, J. and Gonzalez, H. (1987) Return to Aztlan: The Social Process of
International Migration from Western Mexico. Berkeley: University of California Press.
Massey, D.S., Arango, J., Hugo, G., Kouaouci, A., Pellegrino, A. and Taylor, J.E. (1998) Worlds in Motion:
Understanding International Migration at the End of the Millenium. Oxford: Oxford University Press.

136
GASTON AND NELSON
Mayda, A.M. (2006) Who is against immigration? A cross-country investigation of individual attitudes
toward immigrants. Review of Economics and Statistics 88(3): 510530.
Mayda, A.M. (2008) Why are people more pro-trade than pro-migration? Economics Letters 101(3): 160
163.
Mayda, A.M. (2010) International migration: a panel data analysis of the determinants of bilateral flows.
Journal of Population Economics 23(4): 12491274.
Mayr, K. (2007) Immigration and income redistribution: a political economy analysis. Public Choice
131(12): 101116.
Mazza, I. and van Winden, F. (1996) A political economic analysis of labor migration and income
redistribution. Public Choice 88(34): 333363.
McCallum, J. (1995) National borders matter: Canada-US regional trade patterns. American Economic Review
85(3): 615623.
Meltzer, A.H. and Richard, S.F. (1981) A rational theory of the size of government. Journal of Political
Economy 89(5): 914927.
Michel, P., Pestieau, P. and Vidal, J.P. (1998) Labor migration and redistribution with alternative assimilation
policies: the small economy case. Regional Science and Urban Economics 28(3): 363377.
Miguet, F. (2008) Voting about immigration policy: what does the Swiss experience tell us? European Journal
of Political Economy 24(3): 628641.
Millimet, D.L. and Osang, T. (2007) Do state borders matter for US intranational trade? The role of history
and internal migration. Canadian Journal of Economics 40(1): 93126.
Molle, W. and van Mourik, A. (1988) International movements of labor under conditions of economic
integration: the case of Western Europe. Journal of Common Market Studies 26(3): 317342.
Moretti, E. (1999) Social networks and migrations: Italy 18761913. International Migration Review 33(3):
640657.
Moses, J.W. and Letnes, B. (2004) The economic costs to international labor restrictions: revisiting the
empirical discussion. World Development 32(10): 16091626.
Mundell, R.A. (1957) International trade and factor mobility. American Economic Review 47(3): 321
335.
Mundra, K. (2005) Immigration and international trade: a semiparametric empirical investigation. Journal of
International Trade & Economic Development 14(1): 6591.
Murat, M. and Pistoresi, B. (2009) Migrant networks: empirical implications for the Italian bilateral trade.
International Economic Journal 23(3): 371390.
Nelson, P. (1959) Migration, real income and information. Journal of Regional Science 1(2): 4374.
Nelson, D.R. and Xu, Y. (2001) Political economy of illegal migration. Tulane University Working Paper.
Norman, V.D. and Venables, A.J. (1995) International trade, factor mobility, and trade costs. Economic
Journal 105(433): 14881504.
Nunn, N. (2007) Relationship-specificity, incomplete contracts, and the pattern of trade. Quarterly Journal
of Economics 122(2): 569600.
Okkerse, L. (2008) How to measure labour market effects of immigration. Journal of Economic Surveys
22(1): 130.
Opp, M.M., Sonnenschein, H.F. and Tombazos, C.G. (2009) Rybczynskis theorem in the Heckscher-Ohlin
world: anything goes. Journal of International Economics 79(1): 137142.
ORourke, K.H. and Sinnott, R. (2006) The determinants of individual attitudes towards immigration.
European Journal of Political Economy 22(4): 838861.
Orrenius, P.M. and Zavodny, M. (2007) Does immigration affect wages? A look at occupation-level evidence.
Labour Economics 14(5): 757773.
Ortega, F. and Peri, G. (2009) The causes and effects of international migrations: evidence from OECD
countries 19802005. Human Development Research Paper 2009/06. NBER.
Ottaviano, G.I.P. and Peri, G. (2008) Immigration and national wages: clarifying the theory and the empirics.
NBER Working Paper 14188.
Ottaviano, G.I.P. and Peri, G. (2010) Rethinking the effects of immigration on wages. Journal of the European
Economic Association 54(4): 550570.
Overman, H.G. and Puga, D. (2002) Unemployment clusters across Europes regions and countries. Economic
Policy (34): 115147.

137
Palloni, A., Massey, D.S., Ceballos, M., Espinosa, K. and Spittel, M. (2001) Social capital and international
migration: a test using information on family networks. American Journal of Sociology 106(5):
12621298.
Parsons, C. (2005) Quantifying the trade-migration nexus of the enlarged EU: a comedy of errors or much
ado about nothing? Sussex Centre for Migration Research Working Papers 27.
Partridge, J. and Furtan, H. (2008) Immigration wave effects on Canadas trade flows. Canadian Public
Policy-Analyse De Politiques 34(2): 193214.
Phillips, J.A. and Massey, D.S. (2000) Engines of immigration: stocks of human and social capital in Mexico.
Social Science Quarterly 81(1): 3348.
Piperakis, A.S., Milner, C. and Wright, P.W. (2003) Immigration, trade costs, and trade: gravity evidence for
Greece. Journal of Economic Integration 18(4): 750762.
Polanyi, K. (1957) Trade and Market in the Early Empires; Economies in History and Theory. Glencoe, IL:
Free Press.
Polanyi, K. (1968) Primitive, Archaic, and Modern Economies; Essays of Karl Polanyi. Garden City, NY:
Anchor Books.
Poros, M.V. (2002) The role of migrant networks in linking local labour markets: the case of Asian Indian
migration to New York and London. Global Networks 1(3): 243260.
Portes, R. and Rey, H. (2005) The determinants of cross-border equity flows. Journal of International
Economics 65(2): 269296.
Portes, A. and Sensenbrenner, J. (1993) Embeddedness and immigration: notes on the social determinants
of economic action. American Journal of Sociology 98(6): 13201350.
Rakowski, J.J. (1970) Capital mobility in a tariff-ridden international economy. American Economic Review
60(4): 753760.
Ranjan, P. and Lee, J.Y. (2007) Contract enforcement and international trade. Economics & Politics 19(2):
191218.
Raphael, S. and Smolensky, E. (2009a) Immigration and poverty in the United States. In S. Danziger and M.
Cancian (eds), Changing Poverty, Changing Policies (pp. 122150). New York: Russell Sage Foundation.
Raphael, S. and Smolensky, E. (2009b) Immigration and poverty in the United States. American Economic
Review 99(2): 4144.
Rauch, J.E. (1999) Networks versus markets in international trade. Journal of International Economics 48(1):
735.
Rauch, J.E. (2001) Business and social networks in international trade. Journal of Economic Literature 39(4):
11771203.
Rauch, J.E. and Casella, A. (2003) Overcoming informational barriers to international resource allocation:
prices and ties. Economic Journal 113(484): 2142.
Rauch, J.E. and Trindade, V. (2003) Ethnic Chinese networks in international trade. Review of Economics
and Statistics 84(1): 116130.
Ravenstein, E.G. (1885) The law of migration (part i). Journal of the Royal Statistical Society of London
48(2): 167235.
Ravenstein, E.G. (1889) The law of migration (part ii). Journal of the Royal Statistical Society 52(2): 241
305.
Rawls, J. (1999) The Law of Peoples. Cambridge, Mass: Harvard University Press.
Razin, A. and Sadka, E. (1994) International migration and international trade. In M.R. Rosenzweig and
O. Stark (eds), Handbook of Population and Family Economics (pp. 851887, Vol. 1). Amsterdam:
North-Holland.
Razin, A. and Sadka, E. (1999) Migration and pension with international capital mobility. Journal of Public
Economics 74(1): 141150.
Razin, A. and Sadka, E. (2001) Interactions between international migration and the welfare state. In
S. Djajie (ed.), International Migration: Trends, Policies and Economic Impact (pp. 6988). London:
Routledge.
Razin, A., Sadka, E. and Swagel, P. (2002) Tax burden and migration: a political economy theory and
evidence. Journal of Public Economics 85(2): 167190.
Razin, A., Sadka, E. and Nam, C.W. (2005) The Decline of the Welfare State: Demography and Globalization.
Cambridge: MIT Press.

138
GASTON AND NELSON
Redding, S. and Vera-Martin, M. (2006) Relative endowments and production in European regions. Review
of World Economics 142(1): 132.
Rees, A. (1966) Information networks in labor markets. American Economic Review 56(2): 559566.
Roemer, J.E. and Van Der Straeten, K. (2005) Xenophobia and the size of the public sector in France: a
politico-economic analysis. Journal of Economics 86(2): 95144.
Roemer, J.E. and Van Der Straeten, K. (2006) The political economy of xenophobia and distribution: the
case of Denmark. Scandinavian Journal of Economics 108(2): 251277.
Roemer, J.E., Lee, W. and Van Der Straeten, K. (2007) Racism, Xenophobia, and Distribution: Multi-Issue
Politics in Advanced Democracies. New York: Harvard University Press/Russell Sage foundation.
Roy, A.D. (1951) Some thoughts on the distribution of earnings. Oxford Economic Papers 3(2): 135
146.
Ruffin, R.J. (1984) International factor movements. In R.W. Jones and P. Kenen (eds), Handbook of
International Economics (pp. 237288). Amsterdam: Elsevier.
Rybczynski, T.M. (1955) Factor endowments and relative commodity prices. Economica 22(88): 336341.
Samuelson, P.A. (1949) International factor price equalization once again. Economic Journal 59(234):
181197.
Scheve, K.F. and Slaughter, M.J. (2001) Labor market competition and individual preferences over migration
policy. Review of Economics and Statistics 83(1): 133145.
Scholten, U. and Thum, M. (1996) Public pensions and immigration policy in a democracy. Public Choice
87(34): 347361.
Schott, P.K. (2003) One size fits all? Heckscher-Ohlin specialization in global production. American Economic
Review 93(3): 686708.
Schwellnus, C. (2008) The non-traded sector, lobbying, and the choice between the customs union and the
common market. Economics and Politics 20(3): 361390.
Shughart, W.F., II, Tollison, R.D. and Kimenyi, M.S. (1986) The political economy of immigration restriction.
Yale Journal on Regulation 4(1): 7997.
Sidgwick, H. (1891) Principles of external policy. In The Elements of Politics (pp. 285315). London:
Macmillan.
Smith, T.E. (1975) A choice theory of spatial interaction. Regional Science and Urban Economics 5(2):
137176.
Smith, T.E. (1976) Spatial discounting and the gravity hypothesis. Regional Science and Urban Economics
6: 331356.
Suen, W. (2000) Estimating the effects of immigration in one city. Journal of Population Economics 13(1):
99112.
Svensson, L.E.O. (1984) Factor trade and goods trade. Journal of International Economics 16(34): 365378.
Tadesse, B. and White, R. (2008) Do immigrants counter the effect of cultural distance on trade? Eevidence
from US state-level exports. Journal of Socio-Economics 37(6): 23042318.
Tadesse, B. and White, R. (2010) Cultural distance as a determinant of bilateral trade flows: do immigrants
counter the effect of cultural differences? Applied Economics Letters 17(2): 147152.
Tai, S.H.T. (2009) Market structure and the link between migration and trade. Review of World Economics
145(2): 225249.
Thum, M. (2004) Controlling migration in an open labor market. Public Choice 119(34): 425443.
Timmer, A.S. and Williamson, J.G. (1998) Immigration policy prior to the 1930s: labor markets, policy
interactions, and globalization backlash. Population and Development Review 24(4): 739771.
Tolbert, C.J. and Hero, R.E. (1996) Race/ethnicity and direct democracy: an analysis of Californias illegal
immigration initiative. Journal of Politics 58(3): 806818.
Tombazos, C.G., Yang, X. and Zhang, D. (2005) A neo-Heckscher-Ohlin model of trade with endogenous
production patterns. Economic Record 81: S71S81.
Trefler, D. (1995) The case of the missing trade and other mysteries. American Economic Review 85(5):
10291046.
Tu, P.N.V. (1991) Migration: gains or losses. Economic Record 67(197): 153157.
Tullock, G. (1967) The welfare costs of tariffs, monopolies and theft. Western Economic Journal 5(3):
224232.
Turrini, A.A. and van Ypersele, T. (2006) Legal costs as barriers to trade. CEPR Discussion Paper 5751.

139
Venables, A. (1999) Trade liberalisation and factor mobility: an overview. In R. Faini, J. deMelo and K.F.
Zimmermann (eds), Migration: The Controversies and the Evidence (pp. 2347). Cambridge: Cambridge
University Press.
Wagner, D., Head, K. and Ries, J. (2002) Immigration and the trade of provinces. Scottish Journal of Political
Economy 49(5): 507525.
Walmsley, T.L. and Winters, L.A. (2005) Relaxing the restrictions on the temporary movement of natural
persons: a simulation analysis. Journal of Economic Integration 20(4): 688726.
Walzer, M. (1981) The distribution of membership. In P. Brown and H. Shue (eds.), Boundaries: National
Autonomy and Its Limits (pp. 135). Totowa, New Jersey: Rowman and Littlefield.
Wasserman, S. and Faust, K. (1994) Social Network Analysis: Methods and Applications. Cambridge:
Cambridge University Press.
Wegge, S.A. (1998) Chain migration and information networks: evidence from nineteenth-century HesseCassel. Journal of Economic History 58(4): 957986.
Weidenbaum, M.L. and Hughes, S. (1996) The Bamboo Network: How Expatriate Chinese Entrepreneurs are
Creating a New Economic Superpower in Asia. New York: Martin Kessler Books.
Wellisch, D. and Walz, U. (1998) Why do rich countries prefer free trade over free migration? Tthe role of
the modern welfare state. European Economic Review 42(8): 15951612.
Wellisch, D. and Wildasin, D.E. (1996) Decentralized income redistribution and immigration. European
Economic Review 40(1): 187217.
White, H.C. (1992) Identity and Control: A Structural Theory of Social Action. Princeton, NJ: Princeton
University Press.
White, H.C. (2002) Markets from Networks: Socioeconomic Models of Production. Princeton, NJ: Princeton
University Press.
White, R. (2007a) An examination of the Danish immigrant-trade link. International Migration 45(5): 6186.
White, R. (2007b) Immigrant-trade links, transplanted home bias and network effects. Applied Economics
39(7): 839852.
White, R. (2009) Immigration, trade and home country development: state-level variation in the US
immigrantexport link. Journal of International Migration and Integration 10(2): 121143.
White, R. and Tadesse, B. (2007) Immigration policy, cultural pluralism and trade: evidence from the white
Australia policy. Pacific Economic Review 12(4): 489509.
White, R. and Tadesse, B. (2008a) Cultural distance and the US immigrant-trade link. World Economy 31(8):
10781096.
White, R. and Tadesse, B. (2008b) Immigrants, cultural distance and U.S. State-level exports of cultural
products. North American Journal of Economics and Finance 19(3): 331348.
Wildasin, D.E. (1994) Income redistribution and migration. Canadian Journal of Economics 27(3): 637656.
Williamson, O.E. (1975) Markets and Hierarchies: Analysis and Antitrust Implications: A Study in the
Economics of Internal Organization. New York: Free Press.
Williamson, O.E. (1985) The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting.
New York: Free Press.
Williamson, O.E. (1996) The Mechanisms of Governance. New York: Oxford University Press.
Wong, K.-Y. (1986) The economic analysis of international migration: a generalization. Canadian Journal
of Economics 19(2): 357362.
Wong, K.-Y. (1988) International factor mobility and the volume of trade: an empirical study. In R.C.
Feenstra (ed.), Empirical Methods for International Trade (pp. 231250). Cambridge: MIT Press.
Wong, K.-Y. (1995) International Trade in Goods and Factor Mobility. Cambridge, MA: MIT Press.
Wong, S.-lL. and Salaff, J.W. (1998) Network capital: emigration from Hong Kong. British Journal of
Sociology 49(3): 358374.
Yang, D. (2008) International migration, remittances, and household investment: evidence from Philippine
migrants exchange rate shocks. Economic Journal 118(528): 591630.
Zipf, G.K. (1946) The p1 p2 /d hypothesis: on the intercity movement of persons. American Sociological
Review 11(6): 677686.

Copyright of Journal of Economic Surveys is the property of Wiley-Blackwell and its content may not be
copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written
permission. However, users may print, download, or email articles for individual use.

Bridging Trade Theory and Labour Econometrics

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Bridging Trade Theory and Labour Econometrics

Transféré par

Droits d'auteur :

Formats disponibles

doi: 10.1111/j.1467-6419.2011.00696.

BRIDGING TRADE THEORY AND LABOUR

Journal of Economic Surveys (2013) Vol. 27, No. 1, pp. 98139

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

2. The Basic Trade Framework

GASTON AND NELSON

3. Empirical Results Based on Standard Models

3.1 Empirics of Immigration and Wages Circa 2011

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

3.2 Empirical Links between Endowment Changes and Output Changes

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

3.3 Geographical Heterogeneity and Immigration

GASTON AND NELSON

Figure 1. Multiple Cones in the HO Model.

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

4. Global Effects of International Migration

GASTON AND NELSON

4.2 Are Factor Mobility and Commodity Mobility Complements or Substitutes?

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

4.2.1 Complements and Substitutes in Theory

Figure 2. Substitutes in Samuelsons FPE Diagram.

GASTON AND NELSON

Figure 3. Complements in Samuelsons FPE Diagram.

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

4.2.2 Empirical Research on Complements and Substitutes

GASTON AND NELSON

4.3 The Social Structure of Migration: Networks, Migration and Trade

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

5. Welfare and Political Economy

5.1 The Welfare Economics of Migration

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

5.2 The Peculiar Political Economy of Immigration

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

Journal of Economic Surveys (2013) Vol. 27, No. 1, pp. 98139

GASTON AND NELSON

Journal of Economic Surveys (2013) Vol. 27, No. 1, pp. 98139

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

Journal of Economic Surveys (2013) Vol. 27, No. 1, pp. 98139

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

GASTON AND NELSON

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS

Journal of Economic Surveys (2013) Vol. 27, No. 1, pp. 98139