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

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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
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    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

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