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Rental prices in Germany: A comparison between migrants and natives

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  • Eilers, Lea
  • Paloyo, Alfredo R.
  • Vance, Colin

Abstract

This paper deals with the question of whether migrants in Germany pay a rent premium for apartments of comparable quality and neighborhood characteristics. We use a twostep selection-correction model augmented by a control function to account for nonrandom neighborhood choice. The estimation sample is a uniquely assembled panel comprising the German Socio-Economic Panel (SOEP), information on household and apartment characteristics, as well as georeferenced data describing neighborhood quality. We find no evidence that having a migrant background is directly associated with higher rent. Migrants may nevertheless face higher rents by settling in neighborhoods populated by a high share of foreigners, which we find has a positive and statistically significant relationship with the rent.

Suggested Citation

  • Eilers, Lea & Paloyo, Alfredo R. & Vance, Colin, 2017. "Rental prices in Germany: A comparison between migrants and natives," Ruhr Economic Papers 736, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:736
    DOI: 10.4419/86788856
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    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. 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.
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    3. Neumann, Uwe & Schmidt, Christoph M., 2024. "The dynamics of household location preferences in Germany," Ruhr Economic Papers 1126, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    Keywords

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    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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