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The Neighbor is King: Customer Discrimination in the Housing Market

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Abstract

This paper provides a method to single out customer-based discrimination in the housing market. We build a matching model with ethnic externalities where landlords differ in the number of housing units they own within the same building. Multiple-dwelling landlords discriminate more often than single-dwelling landlords only if some tenants are prejudiced against the minority group. By testing the null hypothesis whereby minority tenants are equally likely to have a multiple-dwelling landlord, we can test whether there is customer discrimination or not. We run the test on French data and show evidence of customer discrimination in the rental market.

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File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2012_-_nr_24.pdf
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Bibliographic Info

Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1224.

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Length: 37 pages
Date of creation: 24 Sep 2012
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Handle: RePEc:aim:wpaimx:1224

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Web page: http://www.amse-aixmarseille.fr/en
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Keywords: Customer Discrimination; Matching frictions; Neighborhood Externalities; Housing Market.;

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References

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  1. Bruno DECREUSE & Benoît SCHMUTZ, 2012. "Residential Mobility and Unemployment of African Immigrants in France : a Calibration Approach," Annales d'Economie et de Statistique, ENSAE, issue 107-108, pages 3.
  2. Hanson, Andrew & Hawley, Zackary, 2011. "Do landlords discriminate in the rental housing market? Evidence from an internet field experiment in US cities," Journal of Urban Economics, Elsevier, vol. 70(2-3), pages 99-114, September.
  3. Judith K. Hellerstein & David Neumark & Melissa McInerney, 2007. "Spatial Mismatch or Racial Mismatch?," NBER Working Papers 13161, National Bureau of Economic Research, Inc.
  4. Dominique Goux & Eric Maurin, 2007. "Close Neighbours Matter: Neighbourhood Effects on Early Performance at School," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(523), pages 1193-1215, October.
  5. David Card & Alexandre Mas & Jesse Rothstein, 2008. "Tipping and the Dynamics of Segregation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(1), pages 177-218, 02.
  6. Cutler, David & Vigdor, Jacob & Glaeser, Edward, 1999. "The Rise and Decline of the American Ghetto," Scholarly Articles 2770033, Harvard University Department of Economics.
  7. Aeberhardt, Romain & Fougère, Denis & Pouget, Julien & Rathelot, Roland, 2007. "Wages and Employment of French Workers with African Origin," IZA Discussion Papers 2898, Institute for the Study of Labor (IZA).
  8. Stephen L. Ross, 2008. "Understanding Racial Segregation: What is known about the Effect of Housing Discrimination," Working papers, University of Connecticut, Department of Economics 2008-15, University of Connecticut, Department of Economics, revised Nov 2008.
  9. John Yinger, 1998. "Evidence on Discrimination in Consumer Markets," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 12(2), pages 23-40, Spring.
  10. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521698221.
  11. Bo Zhao & Jan Ondrich & John Yinger, 2005. "Why Do Real Estate Brokers Continue to Discriminate? Evidence from the 2000 Housing Discrimination Study," Center for Policy Research Working Papers, Center for Policy Research, Maxwell School, Syracuse University 67, Center for Policy Research, Maxwell School, Syracuse University.
  12. Kerwin Kofi Charles & Jonathan Guryan, 2008. "Prejudice and Wages: An Empirical Assessment of Becker's The Economics of Discrimination," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 116(5), pages 773-809, October.
  13. Kevin Lang, 2007. "Introduction to Poverty and Discrimination
    [Poverty and Discrimination]
    ," Introductory Chapters, Princeton University Press, Princeton University Press.
  14. Gabriel DESGRANGES & Étienne WASMER, 2000. "Appariements sur le marché du logement," Annales d'Economie et de Statistique, ENSAE, issue 58, pages 253-287.
  15. Ondrich, Jan & Stricker, Alex & Yinger, John, 1999. "Do Landlords Discriminate? The Incidence and Causes of Racial Discrimination in Rental Housing Markets," Journal of Housing Economics, Elsevier, Elsevier, vol. 8(3), pages 185-204, September.
  16. Uri Gneezy & John List & Michael K. Price, 2012. "Toward an Understanding of Why People Discriminate: Evidence from a Series of Natural Field Experiments," NBER Working Papers 17855, National Bureau of Economic Research, Inc.
  17. Ahmed, Ali M. & Hammarstedt, Mats, 2008. "Discrimination in the rental housing market: A field experiment on the Internet," Journal of Urban Economics, Elsevier, vol. 64(2), pages 362-372, September.
  18. King, A Thomas & Mieszkowski, Peter, 1973. "Racial Discrimination, Segregation, and the Price of Housing," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(3), pages 590-606, May-June.
  19. Yinger, John, 1997. "Cash in Your Face: The Cost of Racial and Ethnic Discrimination in Housing," Journal of Urban Economics, Elsevier, vol. 42(3), pages 339-365, November.
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Cited by:
  1. Pierre-Philippe Combes & Bruno Decreuse & Morgane Laouenan & Alain Trannoy, 2011. "Customer Discrimination and Employment Outcomes: Theory and Evidence from the French Labor Market," Working Papers, HAL halshs-00624435, HAL.
  2. Yann Algan & Camille Hémet & David Laitin, 2013. "The Social Effects of Ethnic Diversity at the Local Level: A Natural Experiment with Exogenous Residential Allocation," AMSE Working Papers, Aix-Marseille School of Economics, Marseille, France 1338, Aix-Marseille School of Economics, Marseille, France, revised 10 Jul 2013.

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