An empirical analysis on immigrants and price elasticity in the import demand function
Abstract
Purpose
The purpose of this paper is to explore the empirical relationship between the share of immigrants and the price elasticity of import demand.
Design/methodology/approach
We estimate the import demand function including the interaction term of the share of immigrants and relative import price, using panel data of 76 countries/areas.
Findings
The coefficient of the interaction term is significantly positive, that is, a higher share of immigrants weakens the negative effect of the relative import price on import demand. Our findings reveal the negative relationship between the share of immigrants and the price elasticity of import demand.
Practical implications
The share of immigrants is increasing in the present era of globalization, and it is possible that the role of exchange rate as the price adjustment mechanism in international trade become lower in the future.
Originality/value
This research considers different price elasticities for import goods by immigrants and natives.
Keywords
Acknowledgements
The previous version of this paper was presented at the 75th Annual Meeting of the Population Association of Japan. I wish to express my strong appreciation to the editor and two anonymous referees for their insightful comments on my paper. I also appreciate Dr Masataka Nakagawa, Dr Toshihiko Hara and Dr Tomoko Kinugasa for valuable comments.
Citation
Fukumoto, Y. (2024), "An empirical analysis on immigrants and price elasticity in the import demand function", Journal of Economic Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JES-01-2024-0011
Publisher
:Emerald Publishing Limited
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