Housing Market Responses to Immigration; Evidence from Italy

Abstract

This study empirically examines the impact of immigration on the dynamics of housing prices across Italian provinces from 1996 till 2007 using the number of valid residence permits as a measure of immigration stock and the self-reported housing values from the Survey of Households Income Wealth in Italy. The massive debate upon the impact of current intensive immigration flows on the well-being of the is mainly focused on labor market outcomes which is, however, only one of the channels through which the real income and wealth can alter. This paper contributes to our understanding of the influence that recent intensive immigration flows have on the housing market in Italy. Moreover, the study exploits different methodological approach with respect to one dominating in migration literature. The obtained results suggest that an increase in immigrant population leads to an increase in average housing prices. Instead, the increase in the concentration of immigrants in the Italian provinces has a positive but declining effect on the average housing prices in provinces. The performed Difference and System GMM estimations confirm both the positive response of average housing prices to the increase in immigrant population and the non-linearity of its response to immigrants’ concentration.