The geography of refugee shocks

This paper studies how refugee inflows affect receiving communities using highly disaggregated German administrative data at a 1km × 1km resolution. We develop a novel spatial equilibrium model that features two geographic levels, small neighborhoods and more aggregated local labor markets (LLMs). In the model, local displacement effects and impacts on house prices are closely linked to immigration-induced changes in neighborhood-level amenities and LLM-level productivity. Our empirical results show that refugee inflows lead to a less than one-for-one relative population relocation in neighborhoods, indicating that refugees have a positive impact on local amenities. We also find relocation on the LLM-level to be less than one-for-one, suggesting that refugees also positively impact local productivity.