Immigrants, Cultural Differences, and Trade Costs

Citation data:

International Migration, ISSN: 0020-7985, Vol: 55, Issue: 1, Page: 51-74

Publication Year:
2017
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DOI:
10.1111/imig.12291
Author(s):
Bedassa Tadesse, Roger White
Publisher(s):
Wiley-Blackwell
Tags:
Social Sciences
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article description
We examine the effects of immigrants and cross-societal cultural differences on bilateral trade costs using two alternative measures of cultural differences (i.e. cultural distance and genetic distance). We find that bilateral trade costs generally increase with a rise in the cultural distance between trading partners but fall with a rise in the stock of immigrants. This implies that immigrants counter bilateral trade costs that are associated with greater cultural differences. Our observation is relevant from both migration and trade policy perspectives as it provides further evidence that immigrants serve as conduits for bridging cultural differences, facilitate international transactions, and enhance global economic integration.

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