Don't Stand so Close to Me: The Urban Impact of Immigration

36 Pages Posted: 15 May 2012 Last revised: 16 May 2012

Date Written: April 27, 2012

Abstract

We examine the impact of immigration on the residential market within urban areas. We develop a spatial equilibrium model that shows how the effect of an immigrant inflow in a district affects local housing prices through changes in how natives perceive the quality of their local amenities and how this influences their mobility. Predictions of the model are tested using a novel dataset on housing prices and population variables at the district level for a sample of 20 large Italian cities. To address endogeneity problems we adopt an instrumental variable strategy which uses historical enclaves of immigrants across districts to predict current settlements. We find that immigration raises average housing prices at the city level; however it reduces price growth in a district affected by an inflow vis-à-vis the rest of the city. This pattern is driven by the natives’ flight from immigrant-dense districts towards other areas of the city. These findings are consistent with native preferences to live in predominantly native areas.

Keywords: migration, housing, spatial segregation

JEL Classification: R23, J15, R21, F22

Suggested Citation

Accetturo, Antonio and Manaresi, Francesco and Mocetti, Sauro and Olivieri, Elisabetta, Don't Stand so Close to Me: The Urban Impact of Immigration (April 27, 2012). Bank of Italy Temi di Discussione (Working Paper) No. 866. Available at SSRN: https://ssrn.com/abstract=2057974 or http://dx.doi.org/10.2139/ssrn.2057974

Antonio Accetturo (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Francesco Manaresi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Sauro Mocetti

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Elisabetta Olivieri

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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