Date of Completion

2025

Document Type

Honors College Thesis

Department

Economics

Thesis Type

Honors College

First Advisor

Richard Sicotte

Keywords

immigration, rents, house prices, shift-share, decomposition

Abstract

This study investigates the impact of foreign immigration on rental rates and owner-occupied house prices in metropolitan areas in the United States. Using a panel dataset that covers 381 American metropolitan areas from 2013 to 2022, I demonstrate that immigration may have a significantly positive short-term effect on housing prices. After implementing a version of the classic shift-share instrument to control for the endogeneity of immigration and housing costs, I find that a 1% increase in immigrant concentration as a proportion of total metropolitan area population leads to about a 2% increase in rental rates and a 3% increase in house prices. However, when I decompose the total effect of immigration on housing costs into the effect solely due to increases in immigrant demand and the effect due to induced native migration, I discover that only 18.4% of the total effect on housing costs can be attributed to direct demand from immigrant inflow. Lastly, I find that the impact of immigration on house prices is significantly higher at the upper end of the house price distribution.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

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