Migrating Natives and Foreign Immigration

In this paper we investigate the migration behavior of the native population following foreign (refugee) immigration, with a particular focus on examining whether there is any support for an ethnically based migration response. If ethnicity is the mechanism driving the change in natives' migration behavior, our maintained hypothesis is that native-born individuals who are ethnically similar to arriving refugees should not change their migration behavior to the same extent as native-born individuals with native-born parents (who are ethnically quite di erent to the refugees). Using very rich geo-coded register data from Sweden, spanning over 20 consecutive years, we account for possible endogeneity problems by applying an instrumental variables approach that combines policy-induced initial immigrant settlements with exogenous contemporaneous shocks in the source country (measured through the refugee status of the immigrants). We find evidence of native flight, but we also find that all natives, irrespective of their parents' ethnic background, react similarly to increased immigration (in terms of estimated flight coefficients).
Our results therefore indicate that preference for ethnically homogeneous neighborhoods is not the dominant channel creating flight. Instead our estimates indicate that immigration leads to more socio-economically segregated neighborhoods. This conclusion can have important implications for the ethnically based tipping point literature.