Export, Migration and Costs of Trade: Evidence from Central European Firms

This article analyses the link between immigration and trade at the firm level, utilising information on the export activities of 8,300 firms located in different Central European countries (Austria, Czech Republic, Slovakia and Hungary) for various export markets as well as regional data on immigration. The empirical analysis suggests a strong, economically meaningful and statistically significant impact of immigration on the export propensity (extensive margin), whereas the influence on firms' export volumes (intensive margin) is much smaller. This leads to the conclusion that immigrants promote export activities to their home countries mainly by reducing fixed costs of trade.