Migration, Capital Formation, and House Prices

Arbeitspapier

We investigate the effects of interregional labor market integration in a two-sector, overlapping-generations model with land-intensive production in the non-tradable goods sector (housing). To capture the response to migration on housing supply, capital formation is endogenous, assuming that firms face capital adjustment costs. Our analysis highlights heterogeneous welfare effects of labor market integration. Whereas individuals without residential property lose from immigration due to increased housing costs, landowners may win. Moreover, we show how the relationship between migration and capital formation depends on initial conditions at the time of labor market integration. Our model is also capable to explain the reversal of migration during the transition to the steady state, like observed in East Germany after unification in 1990. It is also consistent with a gradually rising migration stock and house prices in high-productivity countries like Switzerland.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4146

Classification and Topics

• Classification: Wirtschaft ; Micro-Based Behavioral Economics: General‡ ; International Factor Movements and International Business: General ; Economic Development: General
• Subject: capital formation ; house prices ; land distribution ; migration ; welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grossmann, Volker ; Schäfer, Andreas ; Steger, Thomas
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/70931
• Last update: 10.03.2025, 11:43 AM CET