Migration Diversity and House Prices - Evidence from Sweden

Abstract

The impact of migration on local communities and economies is one of the most important and contentious issues of our time. One particular area of policy concern is the extent to which migration results in an increase in house prices, and whether these effects are consistent across different types of location, ranging from large urban areas, to small urban and rural areas. We contribute to the small but growing literature on migration and housing by examining the impact of migration on house prices at different locations in Sweden. Our model, estimated using IV with a shift-share instrument, allows us to disaggregate the effects of labour migration, family reunification migration, and humanitarian migration, as well as to quantify the effect of internal migration. Using data for 284 municipalities over the period 2000-2015, we find that a 1% increase in the foreign-born population results in a 0.8% increase in house prices, which increases to 1.2% if internal migration is also accounted for, allowing us to account for the effects of the displacement of existing residents. Our results also show that the more skilled labour migrants have a large and positive effect on house prices in large urban areas, while refugees, who are often low-skilled, younger, and less wealthy, have a large effect on house prices in the mainly peripheral, rural or small urban areas where they are placed by the government.