Migrant rent penalties in the German housing market

ABSTRACT We investigate whether migrants pay higher rents for comparable housing than natives with similar characteristics using nationally representative data from the 2018 German Microcensus. The dataset enables us to adjust for all micro-level neighborhood characteristics of the dwelling by employing sampling district fixed-effects models and to simultaneously distinguish between migrant groups and generations. On average, across all origin groups and generations, we find no evidence for substantive migrant rent penalties. Refined analyses indicate that, while most origin groups do not face rent penalties, migrants and their descendants from the Middle East, Africa and Asia pay moderately higher rents for comparable housing than natives do. Unexpectedly, we also observe rent differentials for first-generation Western Europeans but no penalty for Turkish migrants and their descendants. These findings underscore the importance of distinguishing between origin groups and generations, as aggregate analyses can mask group-specific disadvantages. The observed heterogeneity in rent penalties also highlights the need for a differentiated framework that conceptualizes such penalties as a multifaceted phenomenon, and for targeted policy measures addressing the needs of specific groups.