The Supply-Side Effect of Immigration on Prices: Evidence from Nursing Homes

Peter Haan, Julia Schmieder and Izabela Wnuk-Soares
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Peter Haan: DIW Berlin, FU Berlin, Berlin School of Economics
Julia Schmieder: Otto von Guericke University Magdeburg, RFBerlin
Izabela Wnuk-Soares: RFBerlin, DIW Berlin

No 585, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market.

Keywords: immigration; labor supply; prices; nursing homes (search for similar items in EconPapers)
JEL-codes: F22 J30 J61 (search for similar items in EconPapers)
Date: 2026-09-09
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