Examining the non-linear relationship between migration and trade

The migration-trade link has been studied extensively since the mid nineties, finding a positive impact through different channels. Based on the generalized propensity score (GPS) methodology, we estimate a dose-response function, depicting a non-linear impact of immigration on exports using regional data for Spain and Italy. For both countries the elasticity of province exports to immigration from a given nationality is always positive. However, it is magnitude varies with the level of immigrants: increasing with less than 100 immigrants; decreasing between 100 and 1500; increasing again with more than 1500. In contrast to previous studies that use country-level data, we find no exhaustion point in the effectiveness of the immigration networks on regional exports.