Dallas Fed: 30% of housing cost increase driven by unauthorized immigration [pdf]

> From early 2021 to early 2024, the U.S. experienced an unprecedented boom in unauthorized immigration, followed by a rapid slowdown beginning in mid-2024. We provide the first systematic empirical assessment of the labor- and housing-market effects of this episode. Using newly available administrative microdata on individual immigrants, we construct measures of net unauthorized immigration at the national and local levels and exploit plausibly exogenous variation across local markets. We find that unauthorized immigrant worker flows (UIWF) increased local employment approximately one-for-one, without significant declines in local wages. These inflows also raised local house prices and rents without expanding housing supply, consistent with a housing demand shock in the face of short-run inelastic supply. Lastly, we find that UIWF reduced labor income per capita, consistent with downward wage composition of the local workforce, and strongly reduced government transfers. These findings should help inform policy debates surrounding how unauthorized immigrant labor supply impacts local labor and housing markets as well as public finances.

Basically what the paper says is at a city-by-city level unauthorized immigrants increase housing prices in to a similar degree to authorized immigrants (about 1% pop increase -> 2% housing price increase), are roughly 100% employed (increase local employment 1:1), and use government services at a lower rate than the base population (about 1% pop increase -> overall 5% decrease in spending). Then a lot of discussion about methodology and related work. I'm a little skeptical of some of the assumptions, they (and apparently the citations) don't appear to account for the fact that in all cases people are more likely to move to places with jobs (economic activity driving labor demand), housing supply is generally pretty inelastic on the scale of a couple years, and so even if nobody moved to the city it's possible wages (and housing prices) would go up anyway.

And nobody it seems wants to see higher density housing unless there’s really no choice. So people end up in large housing which is mostly empty after the kid(s) leave. And their retirement depends on selling out for a profit.

Yes, they could have possibly overlooked things that appear to be obvious in retrospect. Happens all the time because it may or not have been the focus of the paper, or the time constraints may have not permitted this level of research. This is why we usually have multiple papers, each building on each other over time, on the same data sets/topics.

Since housing starts are more likely in areas seeing rapid housing price appreciation, and construction employs many illegal workers, you could make just as strong of a case that increased housing costs drive unauthorized migration rather than the other way around.

That's why it's so hard, and so important, to disentangle correlation and causation.