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Friday, September 18, 2015

The Effect of Refugee Resettlement on Trade

While we are on the topic of refugees, let me follow up on my previous post by citing further evidence on the potential benefits of refugee resettlement to receiving countries. It appears that resettlement plays a big part in the formation of migrant networks, which in turn facilitate trade with origin countries.

Here's some evidence from Parsons and Vezina (forthcoming) using the exodus of Vietnamese boat people in 1975 as a natural experiment. They argue that refugees were exogenously allocated across US States during this period. 20 years after, the share of exports going to Vietnam were larger and more diversified in States which received a higher allocation of refugees:

We provide cogent evidence for the causal pro-trade effect of migrants and in doing so establish an important link between migrant networks and long-run economic development. To this end, we exploit a unique event in human history, i.e. the exodus of the Vietnamese Boat People to the US. This episode represents an ideal natural experiment as the large immigration shock, the first wave of which comprised refugees exogenously allocated across the US, occurred over a twenty-year period during which time the US imposed a complete trade embargo on Vietnam. Following the lifting of trade restrictions in 1994, the share of US exports going to Vietnam was higher and more diversified in those US States with larger Vietnamese populations, themselves the result of larger refugee inflows 20 years earlier.

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