Room in the kitchen for the melting pot: Immigration and rental prices

Albert Saiz

Review of Economics and Statistics, Volume 85, Issue 3 (2003), Pages 502-521


This paper examines the short-run impact of immigration on housing rental markets in the Miami metropolitan area following the Mariel boatlift. During the Mariel boatlift between May and September 1980, around 125,000 Cuban immigrants arrived in southern Florida. Approximately half of them settled in the Miami metropolitan area. In 1980, this led to a four percent increase in Miami’s total population and a nine percent increase in population of renters. Mariel boatlift immigrants were relatively unskilled; had lower educational attainment and lower fluency in English than members of the host community.

The analysis is based on rental data from the 1974–1983 Annual Housing Survey and data on the characteristics of residents from the 1980 and 1990 population censuses. The author examines changes in rental prices in Miami by comparing three groups: (1) other metropolitan areas in Florida; (2) other U.S. cities with similar previous rental price growth; and (3) all other metropolitan areas covered in the national Annual Housing Survey.

Main results:

  • The level of immigration in U.S. metropolitan areas in 1990 is positively correlated with increases in rents for dwellings of moderate quality between 1990 and 1992. This result holds when controlling for changes in income, population, and expectations of future growth. To control for the endogeneity of this result (immigration being correlated with amenities in the Miami area, which might drive rental prices up), the author looked at rental prices vis-à-vis a migration shock: the Mariel boatlift.
  • There was a sharp increase in rental prices in Miami following the Mariel boatlift. Between 1979 and 1981, rents in the Miami area increased by eight to eleven percent compared to rents in comparison metropolitan areas. By 1983, this difference had fallen slightly to about seven percent.
  • There was an even greater impact on housing units rented by poor residents. Units that were occupied by poor ‘Hispanic’ renters in 1979 may have experienced higher rent hikes, whereas units in the highest quartile in the 1979 Miami rent distribution were not affected by the rent spike.
  • Increases in rental prices led to modest reductions in real wages in the very short run, concentrated among low-income households. Overall, real wages declined by 1.4 percent due to increased rental prices, but there was a larger impact for low-income households. For households in the lower quartile of the renters’ income distribution, the decline in real wages was 3.8 percent, whereas for households in the upper quartile of the renters’ income distribution the wage impact range was one percent.


The author argues that immigrants tend to demand lower-quality rental housing and are willing to outbid residents for these kinds of dwellings, leading to increases in rental prices for lower quality rental housing. A low-skilled immigration shock, however, is unlikely to affect demand or rental prices for housing units of higher quality rental housing in the short term. Increases in rental prices have modest adverse effects on the real wage of unskilled workers, which may partly explain the out-migration of low-skilled native workers in the short to medium run. The author also argues that, in the absence of further immigration, the long-run evolution of rents and housing prices depends on whether immigrants are perceived as a negative amenity.