Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272585 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 15958
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper examines the short-run immigration effects on prices for owner-occupied housing and rents in Switzerland, exploiting regional variation at the level of 106 local labour markets ("Mobilité Spatiale" regions) and 26 cantons, respectively. We propose two empirical strategies that exploit the Agreement on the Free Movement of Persons (AFMP) with the European Union (EU), enacted in 2002, as an exogenous shock to immigration. The first approach uses the AFMP reform within an instrumental variable approach, instrumenting current regional inflows of immigrants based on the historical distribution of immigrants across regions. The second conducts an event study of housing price changes before and after the reform, distinguishing between regions with historically high, medium, and low immigration from EU-15 countries. The analysis based on data at the level of local labour markets for the years 1985-2016 suggests that immigration triggered off by the AFMP reform substantially raises prices of single-family homes and of owner-occupied apartments. Estimates based on cantonal data for the years 1998-2016, suggest that immigration raises rental prices even more than prices of owner-occupied housing.
Subjects: 
agreement on the free movement of persons
immigration
shift-share instrument
event study
house prices
rental rates
JEL: 
F22
O18
R31
Document Type: 
Working Paper

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