How Does Immigration Affect Housing Costs in Switzerland?

Fabienne Helfer, Volker Grossmann and Aderonke Osikominu ()
Additional contact information
Fabienne Helfer: University of Fribourg
Aderonke Osikominu: University of Hohenheim

No 15958, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: shift-share instrument; immigration; agreement on the free movement of persons; event study; house prices; rental rates (search for similar items in EconPapers)
JEL-codes: F22 O18 R31 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2023-02
New Economics Papers: this item is included in nep-eur, nep-int, nep-mig and nep-ure
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Published - published in: Swiss Journal of Economics and Statisticsm 2023, 159, 5

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Related works:
Journal Article: How does immigration affect housing costs in Switzerland? (2023)
Working Paper: How Does Immigration Affect Housing Costs in Switzerland? (2023)
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