Does IT matter where immigrants work? Traded goods, non-traded goods, and sector specific employment

Abstract

Immigrant employment often concentrates in non-traded goods sectors and many immigrants have low inter-sectoral mobility. We consider these observed characteristics of immigrant employment for the question of how immigration affects a nation's pattern of production and trade. We model an economy producing three goods, one is non-traded. Domestic labor and capital are domestically mobile but internationally immobile. Some immigrant labor is specific to the non-traded sector. Our model indicates that the output and trade effects of immigration depend importantly on the sector and nature of immigrant employment. Empirical investigation of the model's predictions indicates that trade and immigration are complements. JEL classification: C23, D5, F16, F22, J61, O15 Keywords: trade, immigration, non-traded goods, specific factors, panel.