Mattia Albertini (Università della Svizzera italiana)

The Residential Integration of Transnational Regional Economies: Evidence from the 2015 Swiss Franc Appreciation

Mattia Albertini 
Università della Svizzera italiana

Coauthor: Lorenzo Barisone

Abstract

This paper investigates how residential relocation, due to a change in economic incentives, may affect labor market outcomes and house prices in the Swiss and Eurozone (EZ) transnational economy. We contruct an extensive dataset comprehending Switzerland, Italy and Germany and we test the implication of residential relocation using as a case study the 2015 Swiss Franc (CHF) appreciation, which caused an increase in the purchasing power of a Swiss salary spent in the EZ consumption market. After the shock, Swiss border areas experienced an outflow of residents and an inflow of cross-border workers (CBWs) but no change in employment. We explain these patterns through residential relocation of EZ residents precedently living and working in Switzerland, that now turn into CBW. The relocation caused a reduction in housing demand in Swiss border municipalities which translated into lower housing prices. We find heterogeneous responses at the regional level: in Italian and French-speaking municipalities the relocation prevails, while in German-speaking ones there has been a labor-leisure time effect. The results on the other side of the border (Italy and Germany) are coherent with our effects in Switzerland. Our findings suggest that, economic incentives in the origin country within a transnational economy impact residential relocation with important implication on housing prices, and the employment structure.

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