The Effects of Unrestricted Immigration on the Housing Market

Abstract

According to standard economic theory, a sudden wave of immigration may increase residential overcrowding and boost prices in the rental market. In contrast, the theory of dual housing markets predicts that immigration-caused demand will not be as likely to boost natives’ housing costs where newcomers are highly segregated. To test these two explanations, this chapter uses elite interviews, archival materials, and panel regression models for three natural experiments: Mariel Cubans in Miami; Pieds-Noirs and Harkis “repatriates” in Marseille; and Eastern Europeans in Dublin. Regression models suggest that increased overcrowding occurred in Miami but not in Marseille or Dublin. In contrast, the analysis shows a significant migration-caused rent increase in the normal housing market of only Marseille.