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Rental prices in Germany: A comparison between migrants and natives

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  • Lea Eilers
  • Alfredo R. Paloyo
  • Colin Vance

Abstract

This paper deals with the question of whether migrants pay a rent premium for apartments of comparable quality and neighborhood characteristics. We use a two‐step selection‐correction model augmented by a control function to account for nonrandom neighborhood choice. The estimation sample is a uniquely assembled panel comprising the Socio‐Economic Panel (SOEP), information on household and apartment characteristics, as well as georeferenced data describing neighborhood quality. Our estimates reveal that people with migration backgrounds are not penalized in the German local rental market in terms of higher rental payments.

Suggested Citation

  • Lea Eilers & Alfredo R. Paloyo & Colin Vance, 2021. "Rental prices in Germany: A comparison between migrants and natives," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 434-466, September.
    • Handle: RePEc:bla:scotjp:v:68:y:2021:i:4:p:434-466
    DOI: 10.1111/sjpe.12273
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. 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).
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    6. 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.
    7. 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.
    8. 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.
    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. 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.
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    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

    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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