Human Barriers to International Trade

This paper investigates the impact of human barriers on international trade using data on common ancestry. Using data on 172 countries covering the near universe of international trade, our analysis documents that country pairs with a large ancestral distance are less likely to trade with each other (extensive margin) and, if they do trade, they trade fewer goods (intensive margin). The results are robust to including a vast array of micro-geographic and political control variables. We explore the role of several proximate determinants that lead to this negative relationship, including differences in values, preferences, technology, as well as migration patterns. Our findings offer a partial explanation to the distance puzzle, the observation that estimates of geographic distance have remained persistently high despite substantial decreases in transportation costs in recent years.

Image

Lukas Schmid is an Assistant Professor at the University of Lucerne -- where he teaches empirical methods. His research interests include political economy, labor economics, and international economics. On-going projects explore the interaction between institutions and political and economic behavior, the impact of language and common ancestry on economic outcomes as well as the long-term consequences of education. His articles have been published in American Journal of Political Science, Review of Economics and Statistics, Economic Journal, and elsewhere.