A World Divided: Refugee Centers, House Prices, and Household Preferences

Tinbergen Institute Discussion Paper 2019-075/VIII

54 Pages Posted: 2 Dec 2019

See all articles by Martijn Dröes

Martijn Dröes

University of Amsterdam

Hans Koster

VU University Amsterdam - Department of Spatial Economics

Date Written: November 1, 2019

Abstract

The number of refugees around the world has increased substantially in the last decade. To cope with refugee flows, many countries have built refugee centers (RCs) for refugees to await the outcome of their asylum procedure. The opening of such centers often leads to considerable opposition from the local population. Using detailed housing transactions data from the Netherlands over the period 1990-2015, we examine locals' attitudes towards immigration by investigating households' willingness to pay (WTP) to avoid living near RCs. Comparing the price developments of opened RCs and those that are planned, we show that the opening of an RC decreases house prices within 2km by 3-6%. Using micro-data on home buyers' characteristics and employing a non-parametric hedonic pricing method, we identify households' individual preferences. We show that attitudes of higher income households towards RCs tend to be more negative, while those of foreign-born households are more positive. The WTP is also more negative for larger RCs. These results imply that when opening RCs, it is advisable to keep them relatively small and locate them in more ethnically diverse areas.

Keywords: immigration, house prices, refugee centers, household preferences

JEL Classification: R31, E02, O18

Suggested Citation

Dröes, Martijn and Koster, Hans, A World Divided: Refugee Centers, House Prices, and Household Preferences (November 1, 2019). Tinbergen Institute Discussion Paper 2019-075/VIII, Available at SSRN: https://ssrn.com/abstract=3488252 or http://dx.doi.org/10.2139/ssrn.3488252

Martijn Dröes (Contact Author)

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Hans Koster

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
27
Abstract Views
332
PlumX Metrics