The Impact of International Trade on Migration by Skill Levels and Gender in Developing Countries

Abstract

AbstractThis study explores the impact of trade on (i) migration by skill levels and (ii) migration by gender. To do so, we estimate different dynamic panel data models using stocks of migrants in OECD countries by educational attainment and gender from 1980 to 2010. We use imports, exports, and total trade as the main variables of interest and both external and internal instrumental variable approaches to address endogeneity issues. The results suggest that imports and total trade are positively associated with the stocks of high‐skilled migrants. Exports are negatively associated with the stocks of low‐skilled migrants. The associations are not significant for the medium‐skilled. These results can be explained by the fact that developing countries, abundant in low‐skilled labour, tend to export low‐skilled‐intensive goods and import high‐skilled intensive goods as in the Heckscher‐Ohlin model. Therefore, an increase in imports tends to decrease the reward of high‐skilled individuals (who are relatively scarce in developing countries), thus increasing their incentive to migrate. Vice versa, an increase in export tends to decrease low‐skilled migration. Finally, while comparing the migration effects of trade upon the skilled, we find a stronger positive impact of trade on high‐skilled female migration than that on high‐skilled male. A clearer understanding of the channels through which trade will be a determinant of skilled migration in developing countries may assist policymakers to craft an appropriate policy environment which enhances import substitution of skill‐intensive goods that would serve to discourage skilled emigration.