The Impact of Migration on Trade: Evidence from Brazil

We use 2010-2017 data to explore the impact of migration on trade in Brazil. In order to account for the endogeneity of migrant location within the country and timing of migration, we use an instrument based on linguistic proximity among migrant groups and shocks that led to migration outflows from countries with a strong Brazilian connection, such as Haitis 2010 earthquake. The migrant population of Brazil remains small, but has increased considerably over the last decade. Our results suggest that overall immigration to Brazil had a positive impact on imports, with doubling the average migrant share of the population across municipalities (0.18 percentage points) increasing total imports by 35%. These results were driven by an increase in both differentiated and homogenous imports. The presence of migrants had no significant effect on total exports. The results for Haitian migrants are different and indicate that doubling the average population share of Haitians across municipalities (0.01 percentage points) leads to an increase of 6% in total exports to Haiti. This effect is driven by differentiated exports. The presence of Haitians had no statistically impact on imports from Haiti or homogeneous exports. While the effects are moderate in terms of size, the result for Haitians suggests that there is scope for new diasporas to contribute to the recovery from a natural disaster.