Migrants, Trade and Market Access

Abstract

Abstract Migrants shape market access: they reduce international trade frictions and they affect the geographical location of demand. This paper incorporates both effects in a model of inter- and intra-national trade and migration calibrated to US states. It estimates the elasticity of exports and imports to migrants and shows that reducing US migrant population shares to 1980s levels would increase import (export) trade costs by 7% (2.5%) and decrease US natives' real wages by more than 2%. States with higher exposure to migrant consumer demand than to migrant labor competition would suffer more, as would states with higher export and import exposure.