Disentangling transaction-stage and management-stage discrimination in the rental housing market: evidence from a correspondence experiment in Tokyo

Discrimination against ethnic minorities in rental housing markets is widely documented, yet the mechanisms through which such discrimination arises remain less well understood. Discriminatory behavior may operate at different stages of the rental process, reflecting distinct economic incentives faced by market intermediaries. We investigate these mechanisms using a correspondence experiment in Tokyo’s rental housing market, exploiting Japan’s unique institutional feature in which some real estate agencies provide only brokerage services while others also conduct post-tenancy property management. This setting allows us to distinguish discrimination at the transaction stage from discrimination arising from anticipated management responsibilities. We find that foreign applicants are less likely to receive responses from both types of agents, but that discriminatory responses are significantly stronger among agents responsible for property management, particularly for properties with lower management fees. These results suggest that agents’ decisions reflect cost–benefit considerations related to expected future management burdens. Importantly, we also show that discrimination persists even among brokerage-only agents, indicating that agent-driven discrimination cannot be attributed solely to post-tenancy management concerns or landlords’ preferences. By identifying distinct channels of discrimination and the role of agents’ organizational responsibilities, our findings contribute to the literature on statistical discrimination and highlight the broader role of intermediaries in shaping discriminatory outcomes in housing and other matching markets.