The impact of immigrants

In his blog today Matthew Kahn (http://greeneconomics.blogspot.com/) discusses the relationship between immigrants and urban crime. This question is certainly not unrelated to the situation in Haifa, my home town.

Within less than a decade, Israel's population increased by almost 1,000,000 immigrants. The wave from the former Soviet Union started in 1990 immediately after the fall of the Iron Wall.

However, the increase in crime, especially petty theft and drunk driving, is dwarfed by the positive impact of this immigrations wave. There can be no doubt that the increase in the country's human capital has contributed tremendously to the expansion of Israel's hi-tech industry. At the same time, Israel has become a good example of growth that is demand-driven. The new population, given transfer payments and housing subsidies, created growth that is unprecedented.

An interesting side phenomenon concerns the behavior of the housing market. In the years 1990-1992 housing prices fluctuated widely as a result of the demand shock. It is interesting that it took the market only 2 -3 years to settle to a new equilibrium with only slightly higher price levels.