speci...c heterogeneity in entry costs and demand.

In addition to the work cited above, this paper is related to recent research using aggregated ...rm-level data to provide some evidence on how colonial ties and linguistic similarity in‡uence trade ‡ows. Crozet and Koenig (2010) decompose industry-level bilateral exports in France into the number of exporters and the average exports per ...rm, and employ each of these variables as the dependent variable in a gravity model. Their estimates suggest that a common language and colonial ties increase both the number of exporters and the average exports per ...rm.<sup>3</sup> Anderson (2007) uses data from Sweden to investigate the link between bilateral trade and familiarity (captured by dummy variables for Nordic, Baltic and English-speaking nations). He reports a positive relation, due primarily to the extensive margin.<sup>4</sup> Our paper di¤ers from this line of research in several important respects, however. First, in addition to studying the role of colonial ties/common language, we provide evidence on whether and how migrant networks promote trade. Second, in doing so we use theory-grounded measures of export participation and intensity at the level of the individual producer (linked to information on ...rms’labor productivity and size). Third, and most importantly, we exploit the unique historical background underlying the generating process of our data to provide evidence that migrant networks constitute an important source market and ...rm-speci...c heterogeneity in entry costs and demand.

This paper is also related to recent work using country and product-level data to reexamine the microfoundations of the gravity equation in the context of heterogeneous-...rm models, including Helpman et al. (2008) and Baldwin and Harrigan (2011). Relative to this strand of work, a key distinguishing feature of our empirical analysis is the ability to link information on emigration stocks with detailed data on ...rm-level export outcomes and other ...rm characteristics. In doing so, we also contribute to a rich literature on the e¤ects of social networks on aggregate trade ‡ows (Gould, 1994; Rauch, 1999; Rauch, 2001; Rauch and Trindade, 2002; Melitz, 2008; Guiso et al, 2009).

The remainder of the paper is organized as follows. Section 2 outlines a multi-country heterogeneous-...rm trade model, and uses it to discuss the speci...c channels whereby migrant networks may impact on ...rms’bilateral exports. Section 3 provides historical background and discusses the timing and drivers of Portuguese emigration ‡ows. Section 4 describes the data employed, before section 5 presents preliminary evidence based on country-level data. Section 6 examines the e¤ect of networks on export participation and intensity at the level of the ...rm, emphasizing the role of ...rm age and location in shaping

> 3 Importantly, Crozet and Koenig (2010) also use ...rm-level data to estimate key parameters of the model of Chaney (2008), but in doing so restrict the focus to the e¤ect of geographic distance on trade.

> 4 An important caveat, however, is that the measure of familiarity employed by Anderson (2007) exhibits high colinearity with geographic distance.

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