This work exploits the natural experiment provided by the unexpected disintegration of
socialist East Germany to study the impact of the mass immigration of East Germans on housing
rents in West German metropolitan areas. Using a spatial correlation approach annual
district-level migration data for 1991 and 1992 and unique rental price indicators from
Germany's major regional property market information system Kathleen Kürschner finds strong
evidence for a positive and sizeable effect of immigration on rental prices of residential
housing. Additional explorations that employ an IV approach based on various exogenous
origin-region push factors related to the deteriorating economic conditions in East Germany
yield estimates of even larger magnitude. These results suggest that immigration has important
economic effects outside the labour market traditionally the prime domain of economic
enquiries into the consequences of immigration. The author's findings cast doubt on the
appropriateness of this bias in focus.
