IDEAS home Printed from https://ideas.repec.org/p/diw/diwwpp/dp2177.html

The Supply-Side Effect of Immigration on Prices: Evidence from Nursing Homes

Author

Listed:
  • Peter Haan
  • Julia Schmieder
  • Izabela Wnuk-Soares

Abstract

We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market.

Suggested Citation

  • Peter Haan & Julia Schmieder & Izabela Wnuk-Soares, 2026. "The Supply-Side Effect of Immigration on Prices: Evidence from Nursing Homes," Discussion Papers of DIW Berlin 2177, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp2177
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.1017571.de/dp2177.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sigurd Galaasen & Andreas R. Kostøl & Joan Monras & Jonathan Vogel, 2025. "The Labor Supply Curve is Upward Sloping: The Effects of Immigrant-Induced Demand Shocks," NBER Working Papers 33930, National Bureau of Economic Research, Inc.
    2. Jaeger, David & Ruist, Joakim & Stuhler, Jan, 2018. "Shift-Share Instruments and the Impact of Immigration," CEPR Discussion Papers 12701, Centre for Economic Policy Research.
    3. Galaasen, Sigurd & Kostøl, Andreas Ravndal & Monras, Joan & Vogel, Jonathan, 2025. "The Labor Supply Curve is Upward Sloping: The Labor Market Effects of Immigrant-Induced Demand Shocks," IZA Discussion Papers 17936, IZA Network @ LISER.
    4. Silke Anger & Jacopo Bassetto & Malte Sandner, 2024. "Lifting Barriers to Skill Transferability: Immigrant Integration through Occupational Recognition," Development Working Papers 498, Centro Studi Luca d'Agliano, University of Milano.
    5. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 381-422, June.
    6. Peter Haan & Izabela Wnuk, 2024. "The Effect of Migration on Careers of Natives: Evidence from Long-term Care," Discussion Papers of DIW Berlin 2070, DIW Berlin, German Institute for Economic Research.
    7. Patricia Cortes & Jessica Pan, 2014. "Foreign nurse importation to the United States and the supply of native registered nurses," Working Papers 14-7, Federal Reserve Bank of Boston.
    8. Schmitz, Hendrik & Westphal, Matthias, 2017. "Informal care and long-term labor market outcomes," Journal of Health Economics, Elsevier, vol. 56(C), pages 1-18.
    9. Albert Saiz, 2003. "Room in the Kitchen for the Melting Pot: Immigration and Rental Prices," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 502-521, August.
    10. Tobias Renkin & Claire Montialoux & Michael Siegenthaler, 2022. "The Pass-Through of Minimum Wages into U.S. Retail Prices: Evidence from Supermarket Scanner Data," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 890-908, December.
    11. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    12. Kesternich, Iris & Romahn, André & Van Biesebroeck, Johannes & Van Damme, Marjolein, 2025. "Cash or care? Insights from the German long-term care system," CEPR Discussion Papers 20199, Centre for Economic Policy Research.
    13. Almuhaisen, Abdulmohsen & Amuedo-Dorantes, Catalina & Furtado, Delia, 2025. "Corrigendum to “Immigration enforcement and the institutionalization of elderly Americans” [Journal of Health Economics Volume 94, March 2024, 102859]," Journal of Health Economics, Elsevier, vol. 101(C).
    14. Cortés, Patricia & Pan, Jessica, 2014. "Foreign nurse importation and the supply of native nurses," Journal of Health Economics, Elsevier, vol. 37(C), pages 164-180.
    15. Lukas Delgado-Prieto, 2024. "Immigration, wages, and employment under informal labor markets," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-34, June.
    16. Krista Ruffini, 2024. "Worker Earnings, Service Quality, and Firm Profitability: Evidence from Nursing Homes and Minimum Wage Reforms," The Review of Economics and Statistics, MIT Press, vol. 106(6), pages 1477-1494, November.
    17. Daniel Aaronson & Eric French & James MacDonald, 2008. "The Minimum Wage, Restaurant Prices, and Labor Market Structure," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 688-720.
    18. Dörte Heger & Annika Herr & Maximilian Lückemann & Arndt Reichert & Leonie Tycher, 2025. "Personnel shortages and the provision of long-term care: an empirical analysis of German nursing homes," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 26(9), pages 1539-1555, December.
    19. Joan Monras, 2020. "Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3017-3089.
    20. Haan, Peter & Wnuk, Izabela, 2024. "The Effect of Migration on Careers of Natives: Evidence from Long-Term Care," IZA Discussion Papers 16749, IZA Network @ LISER.
    21. Bernt Bratsberg & Oddbjørn Raaum, 2012. "Immigration and Wages: Evidence from Construction," Economic Journal, Royal Economic Society, vol. 122(565), pages 1177-1205, December.
    22. Christian Dustmann & Albrecht Glitz, 2015. "How Do Industries and Firms Respond to Changes in Local Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 711-750.
    23. Christian Dustmann & Uta Schönberg & Jan Stuhler, 2017. "Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(1), pages 435-483.
    24. Justin H. Leung, 2021. "Minimum Wage and Real Wage Inequality: Evidence from Pass-Through to Retail Prices," The Review of Economics and Statistics, MIT Press, vol. 103(4), pages 754-769, October.
    25. Delia Furtado & Francesc Ortega, 2026. "Does Immigration Improve Quality of Care in Nursing Homes?," Journal of Human Resources, University of Wisconsin Press, vol. 61(1), pages 1-40.
    26. Kirill Borusyak & Peter Hull & Xavier Jaravel, 2022. "Quasi-Experimental Shift-Share Research Designs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 181-213.
    27. Saul Lach, 2007. "Immigration and Prices," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 548-587, August.
    28. Christian Dustmann & Tommaso Frattini & Ian P. Preston, 2013. "The Effect of Immigration along the Distribution of Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 145-173.
    29. Daniel Aaronson, 2001. "Price Pass-Through And The Minimum Wage," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 158-169, February.
    30. Ariel Burstein & Gordon Hanson & Lin Tian & Jonathan Vogel, 2020. "Tradability and the Labor‐Market Impact of Immigration: Theory and Evidence From the United States," Econometrica, Econometric Society, vol. 88(3), pages 1071-1112, May.
    31. Peter Harasztosi & Attila Lindner, 2019. "Who Pays for the Minimum Wage?," American Economic Review, American Economic Association, vol. 109(8), pages 2693-2727, August.
    32. Amior, Michael & Stuhler, Jan, 2023. "Immigration, Monopsony and the Distribution of Firm Pay," CEPR Discussion Papers 18709, Centre for Economic Policy Research.
    33. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    34. Kristin F. Butcher & Kelsey Moran & Tara Watson, 2022. "Immigrant labor and the institutionalization of the U.S.‐born elderly," Review of International Economics, Wiley Blackwell, vol. 30(5), pages 1375-1413, November.
    35. Herr, Annika & Nguyen, Thu-Van & Schmitz, Hendrik, 2016. "Public reporting and the quality of care of German nursing homes," Health Policy, Elsevier, vol. 120(10), pages 1162-1170.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Dustmann & Uta Schoenberg, 2025. "Linking Empirical Evidence to Theory: A Framework for Understanding Immigrations Labor Market Effects," RFBerlin Discussion Paper Series 2522, ROCKWOOL Foundation Berlin (RFBerlin).
    2. repec:osf:socarx:acr4v_v1 is not listed on IDEAS
    3. Xie, Bin, 2025. "The aggregate and distributional effects of immigration restrictions: The 1920s Quota Acts and the Great Black Migration," Journal of Comparative Economics, Elsevier, vol. 53(1), pages 25-55.
    4. Ariel Burstein & Gordon Hanson & Lin Tian & Jonathan Vogel, 2020. "Tradability and the Labor‐Market Impact of Immigration: Theory and Evidence From the United States," Econometrica, Econometric Society, vol. 88(3), pages 1071-1112, May.
    5. Nobel Prize Committee, 2021. "Answering causal questions using observational data," Nobel Prize in Economics documents 2021-2, Nobel Prize Committee.
    6. Peter Haan & Izabela Wnuk, 2024. "The Effect of Migration on Careers of Natives: Evidence from Long-term Care," Discussion Papers of DIW Berlin 2070, DIW Berlin, German Institute for Economic Research.
    7. Sanchis-Guarner, Rosa, 2023. "Decomposing the impact of immigration on house prices," Regional Science and Urban Economics, Elsevier, vol. 100(C).
    8. Aubry, Amandine & Héricourt, Jérôme & Marchal, Léa & Nedoncelle, Clément, 2026. "Does immigration affect native wages? A meta-analysis," Labour Economics, Elsevier, vol. 98(C).
    9. Haan, Peter & Wnuk, Izabela, 2024. "The Effect of Migration on Careers of Natives: Evidence from Long-Term Care," IZA Discussion Papers 16749, IZA Network @ LISER.
    10. Jaeger, David & Ruist, Joakim & Stuhler, Jan, 2018. "Shift-Share Instruments and the Impact of Immigration," CEPR Discussion Papers 12701, Centre for Economic Policy Research.
    11. Parag Mahajan, 2021. "Immigration and Local Business Dynamics: Evidence from U.S. Firms," Working Papers 21-18, Center for Economic Studies, U.S. Census Bureau.
    12. Javier Ortega & Gregory Verdugo, 2022. "Who stays and who leaves? Immigration and the selection of natives across locations," Journal of Economic Geography, Oxford University Press, vol. 22(2), pages 221-260.
    13. Amior, Michael, 2018. "The contribution of foreign migration to local labor market adjustment," LSE Research Online Documents on Economics 91705, London School of Economics and Political Science, LSE Library.
    14. Sharpe, Jamie & Bollinger, Christopher R., 2020. "Who competes with whom? Using occupation characteristics to estimate the impact of immigration on native wages," Labour Economics, Elsevier, vol. 66(C).
    15. George J. Borjas & Anthony Edo, 2026. "Gender, Selection into Employment, and the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, vol. 44(2), pages 515-552.
    16. Christian Dustmann & Sebastian Otten & Uta Schönberg & Jan Stuhler, 2025. "The Effects of Immigration on Places and People - Identification and Interpretation," RFBerlin Discussion Paper Series 2586, ROCKWOOL Foundation Berlin (RFBerlin).
    17. Amior, Michael, 2020. "Immigration, local crowd-out and undercoverage bias," LSE Research Online Documents on Economics 108490, London School of Economics and Political Science, LSE Library.
    18. Alberto Alesina & Marco Tabellini, 2024. "The Political Effects of Immigration: Culture or Economics?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 5-46, March.
    19. Braun, Sebastian Till & Weber, Henning, 2021. "How do regional labor markets adjust to immigration? A dynamic analysis for post-war Germany," Journal of International Economics, Elsevier, vol. 129(C).
    20. Gaetano Basso & Mitali R. Mathur & Giovanni Peri, 2026. "Immigration and Macroeconomic Outcomes in OECD Countries," NBER Working Papers 35523, National Bureau of Economic Research, Inc.
    21. Parisa Ghasemi & Paulino Teixeira & Carlos Carreira, 2024. "Immigrants and the Portuguese labor market: Threat or Advantage?," CeBER Working Papers 2024-02, Centre for Business and Economics Research (CeBER), University of Coimbra.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp2177. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.