Ruhr Economic Papers

Ruhr Economic Papers #736

Rental Prices in Germany: A Comparison Between Migrants and Natives

by Lea Eilers, Alfredo Paloyo and Colin Vance

RGS, RUB, RWI, 11/2017, 23 S./p., 8 Euro, ISBN 978-3-86788-856-1 DOI: 10.4419/86788856

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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.

JEL-Classification: R23, J15, R21

Keywords: Migrants; discrimination; housing market

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