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Rental prices in Germany: A comparison between migrants and natives

Lea Eilers, Alfredo Paloyo and Colin Vance

No 736, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper deals with the question of whether migrants in Germany pay a rent premium for apartments of comparable quality and neighborhood characteristics. We use a twostep selection-correction model augmented by a control function to account for nonrandom neighborhood choice. The estimation sample is a uniquely assembled panel comprising the German Socio-Economic Panel (SOEP), information on household and apartment characteristics, as well as georeferenced data describing neighborhood quality. We find no evidence that having a migrant background is directly associated with higher rent. Migrants may nevertheless face higher rents by settling in neighborhoods populated by a high share of foreigners, which we find has a positive and statistically significant relationship with the rent.

Keywords: migrants; discrimination; housing market (search for similar items in EconPapers)
JEL-codes: R23 J15 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mig and nep-ure
Date: 2017
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