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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. 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).
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. repec:zbw:rwimat:080 is not listed on IDEAS
    11. 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.
    12. repec:zbw:rwimat:077 is not listed on IDEAS
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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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