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Rental prices in Germany: A comparison between migrants and natives
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Rental prices in Germany: A comparison between migrants and natives

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  • Eilers, Lea
  • Paloyo, Alfredo R.
  • Vance, Colin

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.

Suggested Citation

  • Eilers, Lea & Paloyo, Alfredo R. & Vance, Colin, 2017. "Rental prices in Germany: A comparison between migrants and natives," Ruhr Economic Papers 736, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:736
    DOI: 10.4419/86788856
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    References listed on IDEAS

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    1. Auspurg, Katrin & Hinz, Thomas & Schmid, Laura, 2017. "Contexts and conditions of ethnic discrimination: Evidence from a field experiment in a German housing market," Journal of Housing Economics, Elsevier, vol. 35(C), pages 26-36.
    2. Friedrich Scheller, 2011. "Bestimmung der Herkunftsnationen von Teilnehmern des Sozio-oekonomischen Panels (SOEP) mit Migrationshintergrund," SOEPpapers on Multidisciplinary Panel Data Research 407, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Bügelmeyer, Elisabeth & Schaffner, Sandra & Schanne, Norbert & Scholz, Theresa, 2015. "Das DIW-IAB-RWI-Nachbarschaftspanel: Ein Scientific-Use-File mit lokalen Aggregatdaten und dessen Verknüpfung mit dem deutschen Sozio-ökonomischen Panel," RWI Materialien 97, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Bernd Fitzenberger & Benjamin Fuchs, 2017. "The Residency Discount for Rents in Germany and the Tenancy Law Reform Act 2001: Evidence from Quantile Regressions," German Economic Review, Verein für Socialpolitik, vol. 18(2), pages 212-236, May.
    5. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January.
    6. an de Meulen, Philipp & Micheli, Martin & Schaffner, Sandra, 2014. "Documentation of German real estate market data: Sample of real estate advertisements on the internet platform ImmobilienScout24, 2007-2013," RWI Materialien 80, RWI - Leibniz-Institut für Wirtschaftsforschung.
    7. Patrick Bayer & Stephen L. Ross, 2006. "Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application," Working papers 2006-13, University of Connecticut, Department of Economics, revised Jan 2009.
    8. repec:zbw:rwimat:080 is not listed on IDEAS
    9. Fitzenberger Bernd & Fuchs Benjamin, 2017. "The Residency Discount for Rents in Germany and the Tenancy Law Reform Act 2001: Evidence from Quantile Regressions," German Economic Review, De Gruyter, vol. 18(2), pages 212-236, May.
    10. repec:zbw:rwimat:077 is not listed on IDEAS
    11. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    12. Tim Winke, 2016. "Menschen mit Migrationshintergrund zahlen elf Euro mehr Miete pro Monat," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 83(47), pages 1133-1143.
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    Cited by:

    1. Umut Unal & Bernd Hayo & Isil Erol, 2022. "The Effect of Immigration on the German Housing Market," MAGKS Papers on Economics 202238, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    More about this item

    Keywords

    migrants; discrimination; housing market;
    All these keywords.

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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