Impact of Immigrants on Trade:Evidence from Japan

Abstract

This study examines the impact of immigration on Japan’s bilateral trade. Previous studies focused on countries with open borders, such as the US and European countries, with a large population of immigrants. However, this study focuses on Japan, which is an open economy with closed borders and therefore provides a unique case. I estimate the gravity model using trade and immigrant data at the prefecture level. The instrumental variable method is used to control endogeneity. The author finds evidence that immigrants help improve trade with their country of origin. Additionally, the positive effects of immigration are stronger for consumer goods than industrial goods. Finally, immigrants positively affect both the intensive and extensive margins of trade.
JEL classification:F12, F14, F22