## Immigration and Local Inflation

_IMF Working Papers, January 10, 2025_

## Source details

**Canonical URL:** [Immigration and Local Inflation](https://www.imf.org/en/publications/wp/issues/2025/01/10/immigration-and-local-inflation-560285)

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- [Markdown version](/en/publications/wp/issues/2025/01/10/immigration-and-local-inflation-560285/index.md)
- [Structured JSON version](/en/publications/wp/issues/2025/01/10/immigration-and-local-inflation-560285/index.json)
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## Bibliographic details
- Authors: Philip Barrett, Brandon Joel Tan
- Published: January 10, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400296635.001

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### Summary findings
- Methodology: shift-share approach to estimate the impact of inward immigration on local inflation in the United States.
- Aggregate effect: a higher rate of immigration reduces inflation, lowering it by about 0.1 to 0.2 percentage points following a doubling of immigration.
- Sectoral effects:
  - Higher immigration flows lower local goods inflation.
  - Higher immigration flows increase local housing and utilities inflation.
  - No statistically significant impact on inflation in other services.

### Heterogeneity by immigrant characteristics
- Working age immigrants: effects are approximately two time larger relative to the baseline effects.
- Low-education immigrants: effects are approximately three time larger relative to the baseline effects.
- More educated immigrants:
  - No statistically significant impact detected on overall inflation.
  - They do increase local housing inflation.

### Mechanism and interpretation
- Results can be jointly rationalized by a simple general equilibrium model where:
  - The substitutability of capital and labor varies across industries.
  - Capital is fixed in the short run.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2025/01/10/immigration-and-local-inflation-560285_