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Immigration and the Neighborhood

  • Saiz, Albert

    ()

    (Massachusetts Institute of Technology)

  • Wachter, Susan M.

    ()

    (Wharton School, University of Pennsylvania)

What impact does immigration have on neighborhood dynamics? Within metropolitan areas, we find that housing values have grown relatively more slowly in neighborhoods of immigrant settlement. We propose three nonexclusive explanations: changes in housing quality, reverse causality, or the hypothesis that natives find immigrant neighbors relatively less attractive (native flight). To instrument for the actual number of new immigrants, we deploy a geographic diffusion model that predicts the number of new immigrants in a neighborhood using lagged densities of the foreign-born in surrounding neighborhoods. Subject to the validity of our instruments, the evidence is consistent with a causal interpretation of an impact from growing immigration density to native flight and relatively slower housing price appreciation. Further evidence indicates that these results may be driven more by the demand for residential segregation based on race and education than by foreignness per se.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2503.

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Length: 61 pages
Date of creation: Dec 2006
Date of revision:
Publication status: published in: American Economic Journal: Economic Policy, 2011, 3 (2), 169-188
Handle: RePEc:iza:izadps:dp2503
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  1. Edward L. Glaeser, Jed Kolko, and Albert Saiz, 2001. "Consumer city," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 27-50, January.
  2. Edward L. Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
  3. King, A Thomas & Mieszkowski, Peter, 1973. "Racial Discrimination, Segregation, and the Price of Housing," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 590-606, May-June.
  4. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
  5. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 1997. "The Rise and Decline of the American Ghetto," NBER Working Papers 5881, National Bureau of Economic Research, Inc.
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  7. Edin, Per-Anders & Fredriksson, Peter & Åslund, Olof, 2000. "Ethnic enclaves and the economic success of immigrants - evidence from a natural experiment," Working Paper Series 2000:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  8. Kristin F. Butcher & Anne Morrison Piehl, 1998. "Recent immigrants: Unexpected implications for crime and incarceration," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(4), pages 654-679, July.
  9. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-71, Nov./Dec..
  10. Anna Maria Mayda (Georgetown University), 2005. "Who Is Against Immigration? A Cross-Country Investigation of Individual Attitudes towards Immigrants," Working Papers gueconwpa~05-05-10, Georgetown University, Department of Economics.
  11. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Working Papers 07-27, Center for Economic Studies, U.S. Census Bureau.
  12. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  13. Karl E. Case & Robert J. Shiller, 1988. "The Efficiency of the Market for Single-Family Homes," NBER Working Papers 2506, National Bureau of Economic Research, Inc.
  14. Benabou, Roland, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 619-52, August.
  15. Clapp, John M. & Nanda, Anupam & Ross, Stephen L., 2008. "Which school attributes matter? The influence of school district performance and demographic composition on property values," Journal of Urban Economics, Elsevier, vol. 63(2), pages 451-466, March.
  16. Yinger, John, 1976. "Racial prejudice and racial residential segregation in an urban model," Journal of Urban Economics, Elsevier, vol. 3(4), pages 383-396, October.
  17. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  18. Leah Platt Boustan, 2010. "Was Postwar Suburbanization "White Flight"? Evidence from the Black Migration," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 417-443, February.
  19. Saiz, Albert, 2007. "Immigration and housing rents in American cities," Journal of Urban Economics, Elsevier, vol. 61(2), pages 345-371, March.
  20. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February.
  21. Courant, Paul N. & Yinger, John, 1977. "On models of racial prejudice and urban residential structure," Journal of Urban Economics, Elsevier, vol. 4(3), pages 272-291, July.
  22. David Cutler & Edward Glaeser & Jacob Vigdor, 2004. "Is the Melting Pot Still Hot? Explaining the Resurgence of Immigrant Segregation," Working Papers 04-10, Center for Economic Studies, U.S. Census Bureau.
  23. Rosenthal, Stuart S., 2008. "Old homes, externalities, and poor neighborhoods. A model of urban decline and renewal," Journal of Urban Economics, Elsevier, vol. 63(3), pages 816-840, May.
  24. Kenneth F. Scheve & Matthew J. Slaughter, 2001. "Labor Market Competition And Individual Preferences Over Immigration Policy," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 133-145, February.
  25. Galster, George C, 1977. "A Bid-Rent Analysis of Housing Market Discrimination," American Economic Review, American Economic Association, vol. 67(2), pages 144-55, March.
  26. Chambers, Daniel N., 1992. "The racial housing price differential and racially transitional neighborhoods," Journal of Urban Economics, Elsevier, vol. 32(2), pages 214-232, September.
  27. Martin J. Bailey, 1959. "Note on the Economics of Residential Zoning and Urban Renewal," Land Economics, University of Wisconsin Press, vol. 35(3), pages 288-292.
  28. Martin J. Bailey, 1966. "Effects of Race and of Other Demographic Factors on the Values of Single-Family Homes," Land Economics, University of Wisconsin Press, vol. 42(2), pages 215-220.
  29. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  30. 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.
  31. Benabou, R., 1991. "Location, Education, and Production," Working papers 582, Massachusetts Institute of Technology (MIT), Department of Economics.
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