Immigration and international prices

Abstract

This paper considers the relation between immigration and prices for a large number of cities across the world over the period from 1990 to 2006. Aggregate immigration ratios are shown to have a negative impact on international relative prices. The evidence is consistent with demand-side and supply-side considerations both being relevant for the price-reducing effect of immigration, with the latter offering a more likely explanation at annual frequencies during this period. Our findings regarding the inverse relation of immigration and prices and the channels via which this operates across international cities, are broadly consistent wih Lach (2007) and Cortes (2008) who investigate the same relation within Israel and for the US respectively.