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Immigration and housing booms: Evidence from Spain

We estimate empirically the effect of immigration on house prices and residential construction activity in Spain over the period 1998-2008. This decade is characterized by both a spectacular housing market boom and a stunning immigration wave. We exploit the variation in immigration across Spanish provinces and construct an instrument based on the historical location patterns of immigrants by country of origin. The evidence points to a sizeable causal effect of immigration on both prices and quantities in the housing market. Between 1998 and 2008, the average Spanish province received an immigrant inflow equal to 17% of the initial working-age population. We estimate that this inflow increased house prices by about 52% and is responsible for 37% of the total construction of new housing units during the period. These figures imply that immigration can account for roughly one third of the housing boom, both in terms of prices and new construction.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1167.

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Date of creation: Jul 2009
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Handle: RePEc:upf:upfgen:1167
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  1. Giovanni Peri & Gianmarco I.P. Ottaviano, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the U.S," Working Papers 58, University of California, Davis, Department of Economics.
  2. Raquel Carrasco & Juan F. Jimeno & Ana Carolina Ortega, 2004. "The Effect Of Immigration On The Employment Opportunities Of Native-Born Workers: Some Evidence For Spain," Economics Working Papers we046122, Universidad Carlos III, Departamento de Economía.
  3. Farré Lidia & González Libertad & Ortega Francesc, 2011. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-48, June.
  4. Abdurrahman Aydemir & George J. Borjas, 2010. "Attenuation Bias in Measuring the Wage Impact of Immigration," NBER Working Papers 16229, National Bureau of Economic Research, Inc.
  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, 06.
  6. Catalina Amuedo-Dorantes & Sara de la Rica, 2008. "Complements or Substitutes? Immigrant and Native Task Specialization in Spain," Working Papers 2008-35, FEDEA.
  7. Saiz, Albert, 2006. "Immigration and Housing Rents in American Cities," IZA Discussion Papers 2189, Institute for the Study of Labor (IZA).
  8. Ottaviano, Gianmarco & Peri, Giovanni, 2007. "The Effects of Immigration on US Wages and Rents: A General Equilibrium Approach," CEPR Discussion Papers 6551, C.E.P.R. Discussion Papers.
  9. Tommaso Frattini, 2012. "Immigrazione," Rivista di Politica Economica, SIPI Spa, issue 3, pages 363-407, July-Sept.
  10. Greulich, Erica & Quigley, John M. & Raphael, Steven, 2005. "The Anatomy of Rent Burdens: Immigration, Growth and Rental Housing," Berkeley Program on Housing and Urban Policy, Working Paper Series qt63t3t356, Berkeley Program on Housing and Urban Policy.
  11. Raquel Carrasco & Juan Jimeno & A. Ortega, 2008. "The effect of immigration on the labor market performance of native-born workers: some evidence for Spain," Journal of Population Economics, Springer, vol. 21(3), pages 627-648, July.
  12. Ethan Lewis, 2003. "Local, open economies within the U.S.: how do industries respond to immigration?," Working Papers 04-1, Federal Reserve Bank of Philadelphia.
  13. Libertad González Luna & Francesc Ortega, 2007. "How do very open economies adjust to large immigration flows? Recent evidence from Spanish regions," Economics Working Papers 1059, Department of Economics and Business, Universitat Pompeu Fabra.
  14. Bentolila, S, 1996. "Sticky Labor in Spanish Regions," Papers 9616, Centro de Estudios Monetarios Y Financieros-.
  15. Christian Dustmann & Albrecht Glitz & Tommaso Frattini, 2008. "The labour market impact of immigration," Oxford Review of Economic Policy, Oxford University Press, vol. 24(3), pages 478-495, Autumn.
  16. 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.
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