Do Immigrants Counter the Effect of Cultural Distance on Trade? Evidence from US State-level Exports

We examine the effects of immigrants and cultural distance on US state-level exports, placing emphasis on the extent to which immigrants may offset the influence of cultural distance with respect to the initiation and intensification of exports. Our findings suggest that greater cultural differences between the US and immigrants’ home countries reduce both the likelihood that exporting occurs and, when exporting is taking place, the level of exports. Immigrants are found to exert pro-export effects that offset, at least partially, the trade-inhibiting effects of cultural distance. The estimated effects of both cultural distance and immigrants are found to be greater when the level of exports is examined as compared to when the likelihood that exporting occurs is considered; however, significant variation in the export-initiation and intensification effects of immigrants and cultural distance is reported across states