Internal Migration and House Prices in the UK
This dissertation investigates the causal effect of internal migration on house prices in the UK. Historical migration networks are leveraged to identify exogenous variation in internal migration flows, to enable a Card-type shift-share instrumental variable (IV) research design. Contrasting previous studies, this dissertation instruments both internal migration inflows and outflows, while also controlling for international migration, to disentangle their combined effects. Also, this study proposes a novel instrument for net internal migration flows. Ultimately, this study finds a significant house price response of approximately 4.5% per percentage point increase in net internal migration for UK local authorities, ceteris paribus. Furthermore, evidence is found for asymmetries of house price responses between internal migration inflows and outflows, suggesting that local house prices react stronger to migration outflows than to migration inflows. No evidence is found for asymmetries between effects in London and outside of London. Compared to IV estimators, ordinary least squares (OLS) estimators suffer from attenuating bias. It is argued that such bias likely arises from the tendency of internal migrants to settle in regions of slower house price growth. Spatial autoregressive (SAR) estimations reveal a significant co-movement of house prices and net migration in neighbouring regions, implying spatial spillover effects of the migration effect on housing.
Internal migration, House prices, Shift-share IV, Spillovers
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