Do Shifts in Migration policies affect Foreign Trade? - Evidence from the Swedish asylum policy changes of 2016.

Abstract: This paper investigates if migration policy reforms have the ability to affect the trade enhancing effect of migration. Migration policies are one of the factors through which a country can control its migration. A shift in migration policy could therefore possibly alter or affect the effect that migration has on trade. In order to investigate this, the Swedish asylum policy changes of 2016 and its possible effect on Swedish imports are examined. As similar papers which investigate the relationship between migration and trade, this paper will use an augmented gravity model to measure Swedish imports. The paper samples data from Sweden and 186 Swedish trading partners during the years of 2000-2019. The results of this paper show that Swedish immigration has a positive effect on Swedish imports, even after the asylum policy changes of 2016. There is therefore no empirical evidence found in favor of the hypothesis that a shift in a country’s migration policies alter the trade enhancing effects of migration.