Immigration beyond the labor market

Immigrants are not just workers, they are also consumers. Yet most of the literature studying immigration has focused on the former. This paper uses Spanish consumption survey data to characterize how immigrant expenditures across consumption categories differ from that of natives. The largest differences concentrate in housing. Immigrants are much more likely to rent than native households and tend to spend a larger fraction of their income, even when controlling for many observable characteristics. Decompositions of the differences in expenditure patterns between immigrants and natives show that most of the differences cannot be accounted for by standard socioeconomic characteristics such as income, household size, and geography. These differences likely affect sectoral output and prices. We study this question through the lens of a quantitative model calibrated to the Spanish economy where agents have preference heterogeneity for final sectoral output. The model predicts large output and price increases in sectors where immigrants are more important in consumption, like housing, during both the first and second Spanish immigrant waves.