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The neighbor is king: Customer discrimination in the housing market

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Author Info

  • Bruno Decreuse

    (GREQAM, Aix-Marseille Université)

  • Benoît Schmutz

    (GREQAM, Aix-Marseille Université)

  • Alain Trannoy

    (GREQAM, EHESS)

  • Pierre-Philippe Combes

    (GREQAM, Aix-Marseille Université)

Abstract

This paper provides a way to detect customer-based discrimination in the housing market using survey data. We build a matching model with ethnic externalities where landlords differ in the number of housing units they own within the same neighborhood. In the event of customers' prejudice against the minority group, landlords who own several apartments discriminate more often than single-dwelling landlords because they internalize a higher negative externality on their probability to fill their other vacancies. Using the French National Housing Survey, we show that tenants with non-European origin are less likely to rent from a multiple-dwelling land- lord than other tenants. We then show that the proportion of multiple-dwelling landlords at the local level is positively correlated with the probability of non-Europeans to be living in public housing while this is not the case of other ethnic groups.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 1187.

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Date of creation: 2011
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Handle: RePEc:red:sed011:1187

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  1. Kevin Lang, 2007. "Introduction to Poverty and Discrimination
    [Poverty and Discrimination]
    ," Introductory Chapters, Princeton University Press.
  2. Gabriel DESGRANGES & Étienne WASMER, 2000. "Appariements sur le marché du logement," Annales d'Economie et de Statistique, ENSAE, issue 58, pages 253-287.
  3. Zhao, Bo & Ondrich, Jan & Yinger, John, 2006. "Why do real estate brokers continue to discriminate? Evidence from the 2000 Housing Discrimination Study," Journal of Urban Economics, Elsevier, vol. 59(3), pages 394-419, May.
  4. Romain Aeberhardt & Denis Fougère & Julien Pouget & Roland Rathelot, 2010. "Wages and employment of French workers with African origin," Journal of Population Economics, Springer, vol. 23(3), pages 881-905, June.
  5. 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, vol. 8(3), pages 185-204, September.
  6. 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.
  7. Dominique Goux & Eric Maurin, 2006. "Close neighbours matter: neighbourhood effects on early performance at school," LSE Research Online Documents on Economics 19412, London School of Economics and Political Science, LSE Library.
  8. Judith K. Hellerstein & David Neumark & Melissa McInerney, 2007. "Spatial Mismatch or Racial Mismatch?," NBER Working Papers 13161, National Bureau of Economic Research, Inc.
  9. King, A Thomas & Mieszkowski, Peter, 1973. "Racial Discrimination, Segregation, and the Price of Housing," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 590-606, May-June.
  10. 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.
  11. David Card & Alexandre Mas & Jesse Rothstein, 2008. "Tipping and the Dynamics of Segregation," The Quarterly Journal of Economics, MIT Press, vol. 123(1), pages 177-218, 02.
  12. 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.
  13. 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.
  14. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 1999. "The Rise and Decline of the American Ghetto," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 455-506, June.
  15. John Yinger, 1998. "Evidence on Discrimination in Consumer Markets," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 23-40, Spring.
  16. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521875387, October.
  17. 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), pages 99-114.
  18. Stephen L. Ross, 2008. "Understanding Racial Segregation: What is known about the Effect of Housing Discrimination," Working papers 2008-15, University of Connecticut, Department of Economics, revised Nov 2008.
  19. Andrew Hanson & Zackary Hawley, 2011. "Do Landlords Discriminate in the Rental Housing Market? Evidence from an Internet Field Experiment in U.S. Cities," Experimental Economics Center Working Paper Series 2011-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
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Cited by:
  1. Yann Algan & Camille Hémet & David Laitin, 2013. "The Social Effects of Ethnic Diversity at the Local Level: A Natural Experiment with Exogenous Residential Allocation," Working Papers halshs-00843173, HAL.
  2. Pierre-Philippe COMBES & Bruno DECREUSE & Morgane LAOUENAN & Alain TRANNOY, 2013. "Customer Discrimination and Employment OUtcomes: Theory and Evidence from the French Labor Market," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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