Do immigrants affect the profile of U.S. exporters?

ABSTRACT

We highlight that an increase in the stock of immigrants corresponds with greater numbers of U.S. firms that engage in exporting to foreign markets. Our results are obtained from the estimation of a multi-level mixed effects model. Overall, the effect of immigrants is relatively larger among small- and medium-sized enterprises and is smaller among large-sized enterprises. There are, however, considerable differences, both in the magnitude and in nature of the observed effects of immigrants on manufactured and non-manufactured goods exporters of comparable size categories. Similarly, heterogeneity is found in the effects of immigrants on the numbers of small-, medium-, and large-sized exporters across home country cohorts that are grouped by World Bank income classifications and by broad regional classifications of destination markets. These findings imply that immigration has the potential to alter the profile of domestic firms involved in exporting.

KEYWORDS:

• Exports
• firm size
• firm type
• immigrants
• mixed effects model

JEL CLASSIFICATION:

• F14
• F22
• F23

Disclosure statement

The authors have no financial and/or business interests in, are consultants to, or receive funding from any company that may be affected by the research reported here.

Supplemental data for this article can be accessed here.

Notes

¹ For example, a recent USITC (2010) report indicates that U.S. firms export to more than 200 countries with diverse market structures.

² Bernard and Jensen (1999) further report that relative to non-exporting firms, exporters employ more workers, pay higher wages, and maintain higher levels of productivity and technology intensity. Wagner (2007) concludes that exporters are more productive than non-exporters.

³ See Genc et al. (2011) and White and Tadesse (2011) for surveys of the literature.

⁴ Proportionately more migrants than nationals start small businesses in Europe (EC 2009), and immigrant-owned small businesses generate nearly 12% of U.S. business income (USITC 2010).

⁵ The randomness of the model results from the addition of the ‘random component’, thus permitting the constant term to vary across both foreign markets and industry categories.

⁶ Immigrant stocks, rather than flows, are used in the trade-immigration literature based on regression of bilateral trade flows on immigrants, for immigrant stocks are not endogenous to measures of trade flows.

⁷ It is possible for a firm to be a multi-product and/or multi-country exporter. Thus, while determining the total number of exporters of certain products to a given location, the same firm could be counted twice.

⁸ SUEST tests were used to test the equality of coefficients on the immigrant stock variables from regressions from the various size categories. Also, the variance inflation factor (VIF) for each of the right-hand side variables in our empirical model falls below 4, indicating that there is no significant correlation among the each of the control factors.

⁹ Minor variations aside, results from alternative estimations (pooled OLS, panel and count data models) are consistent, indicating the robustness of our estimates.