Question

The impact of labor migration on patterns of international trade depends on the
characteristics of the labor migrants. In which cases might migration expand trade?
World income? In which cases might it reduce trade and world income?

Answer 1

Expansion in trade and world income -
If migrants lower the transactional costs(a migrant's business,economic and political knowledge of their country of origin can reduce costs of import or export) of a trade, and there is increase in the demand for goods that are distinct in the migrant's host country(nostalgia trade), then trade would generally increase between two such countries and there would be a significant increase in world income[This is a case of "complements" among migrants]

Reduction in trade and world income -
On the other hand, if migrants increase the transactional costs of a trade, and say there are now equal employment opportunities in the host countries of a migrant, then the migrants might have enough incentives to not migrate at all.  This would affect trade negatively and cause a fall in trade activities between two such countries and there would be a significant fall in the world income