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The neighbor is king: Customer discrimination in the housing market

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  • 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. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521875387.
  2. 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, University of Chicago Press, vol. 107(3), pages 455-506, June.
  3. Goux, Dominique & Maurin, Eric, 2006. "Close Neighbours Matter: Neighbourhood Effects on Early Performance at School," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5682, C.E.P.R. Discussion Papers.
  4. 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.
  5. 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.
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  7. Romain Aeberhardt & Denis Fougère & Julien Pouget & Roland Rathelot, 2010. "Wages and employment of French workers with African origin," Journal of Population Economics, Springer, Springer, vol. 23(3), pages 881-905, June.
  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. 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.
  10. Gabriel Desgranges & Etienne Wasmer, 2000. "Appariements sur le Marché du Logement," Sciences Po publications info:hdl:2441/8988, Sciences Po.
  11. Hellerstein, Judith K. & Neumark, David & McInerney, Melissa, 2008. "Spatial mismatch or racial mismatch?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 464-479, September.
  12. 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.
  13. 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.
  14. 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.
  15. Kevin Lang, 2007. "Introduction to Poverty and Discrimination
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  16. 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.
  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. 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.
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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, HAL halshs-00843173, HAL.
  2. 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.

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