Working Paper No. 1343

International Trade and Labor Market Integration of Immigrants

Published: June 17, 2020Pages: 45Keywords: Export; Import; Immigrants; Employment; WagesJEL-codes: F16; F22; J21; J31; J61

International Trade and Labor Market Integration of Immigrants Magnus Lodefalk, Fredrik Sjöholm and Aili Tang


We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade.

Using granular longitudinal matched employer-employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages.


Reference:

Lodefalk, Magnus, Fredrik Sjöholm and Aili Tang (2020), "International Trade and Labor Market Integration of Immigrants". IFN Working Paper No. 1343. Stockholm: Research Institute of Industrial Economics (IFN).

Fredrik Sjöholm

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Ph: +46 46 222 74 26
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