Essays on Prices, Wealth, and Mobility

Andrew Aitken

Research output: ThesisDoctoral Thesis

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This thesis examines how economic shocks, specifically exogenous shocks from immigration and developments in the housing market, affect the price people pay for housing, whether or not they move, and whether who they vote for in an election is affected. I make use of two sources of shocks, one from a rapid increase in immigration to the UK since the mid-1990s, and the other from a rapid increase in average house prices, also from the mid-1990s.

In the first chapter I consider whether there is any evidence of a causal relationship between the increase in immigrants and the increase in housing rents and prices in the UK since the mid-1990s. The analysis uses the spatial correlation approach and a properly specified housing demand equation to estimate the causal impact of immigration on house prices and rents. Because the majority of immigrants rent housing rather than own on arrival it is important to study the first order effects on the rental market. I find evidence of a positive effect of immigration on housing rents, and significant negative effects of immigration on house prices.

In the second chapter, I examine whether natives and earlier cohorts of immigrants are displaced from particular local labour markets in response to immigrant inflows. Whether or not immigrants displace natives has important implications for understanding the operation of labour markets. I find strong evidence of native displacement in aggregate, however I also find evidence of sorting by natives and immigrants into different areas by skill time; for example high-skilled natives and high-skilled immigrants appear to be attracted to each over, suggesting that at least some immigrants and natives can be thought of as complements in the labour market.

The third chapter examines the consequences of rapidly increasing house prices on the political preferences of voters. I show that positive unanticipated housing wealth shocks for homeowners causes a significant increase in the likelihood of voting for the Conservative Party. I also present evidence that suggests that housing wealth shocks lead homeowners to hold more conservative economic and social views.
Original languageEnglish
Awarding Institution
  • Royal Holloway, University of London
  • Wadsworth, Jonathan, Supervisor
Award date1 Mar 2015
Publication statusUnpublished - 2015

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