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Unexpected Guests: The Impact of Internal Displacement

Abstract: We study the causal impact of internally displaced people (IDP) inflows on rental prices in Colombian host cities. Following an instrumental variables approach we find that as IDP inflows increase, low-income rental prices increase and high-income rental prices decrease. We provide empirical evidence on two potential mechanisms for these findings: Excess demand for low-income housing puts upwards pressure on rental prices; increasing supply of high-income housing coupled with rising homicide rates put downwards pressure on rental prices.

Keywords: Internal Displaced People, Migration, Crime, Rental Prices
JEL: J1, O15, R23, R31