The contribution of migrants to the exports of Spanish provinces: Implications from gravity modelling with panel data

A sizeable academic literature has documented a positive effect of immigration in promoting trade and investment between the host and the origin country. Using province-level international exports data from Spain, I contribute to the migration- trade link literature in three ways. First, I include a focus on emigration along with immigration. Second, I integrate the latest methodological developments of the re- search on gravity models in the analysis of the migration-trade link to address estima- tion issues and potential functional form mis-specification in the previous literature. Third, implications from the use of sub-national units for theory-consistent modelling are discussed and made explicit. The results of the analysis lead to identify the Gamma PML as the consistent and efficient estimator for the data at stake and to discard the Poisson PML in spite of its growing popularity as a ”workhorse” in gravity models. The estimates robustly confirm a positive and significant effect of province-level immigra- tion stocks on the exports of Spanish provinces and highlight important sub-national variation in the effects; the dynamics of the effects of emigration on trade, instead, appear to be determined at the national level.