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How Does Immigration Affect Housing Costs in Switzerland?

Author

Listed:
  • Helfer, Fabienne

    (University of Fribourg)

  • Grossmann, Volker

    (University of Fribourg)

  • Osikominu, Aderonke

    (University of Hohenheim)

Abstract
This paper examines the short-run immigration effects on prices for owner-occupied housing and rents in Switzerland, exploiting regional variation at the level of 106 local labour markets ("Mobilité Spatiale" regions) and 26 cantons, respectively. We propose two empirical strategies that exploit the Agreement on the Free Movement of Persons (AFMP) with the European Union (EU), enacted in 2002, as an exogenous shock to immigration. The first approach uses the AFMP reform within an instrumental variable approach, instrumenting current regional inflows of immigrants based on the historical distribution of immigrants across regions. The second conducts an event study of housing price changes before and after the reform, distinguishing between regions with historically high, medium, and low immigration from EU-15 countries. The analysis based on data at the level of local labour markets for the years 1985-2016 suggests that immigration triggered off by the AFMP reform substantially raises prices of single-family homes and of owner-occupied apartments. Estimates based on cantonal data for the years 1998-2016, suggest that immigration raises rental prices even more than prices of owner-occupied housing.

Suggested Citation

  • Helfer, Fabienne & Grossmann, Volker & Osikominu, Aderonke, 2023. "How Does Immigration Affect Housing Costs in Switzerland?," IZA Discussion Papers 15958, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp15958
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    More about this item

    Keywords

    agreement on the free movement of persons; immigration; shift-share instrument; event study; house prices; rental rates;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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