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The Neighbor is King: Customer Discrimination in the Housing Market

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 landlord 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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Paper provided by Institut d'economie publique (IDEP), Marseille, France in its series IDEP Working Papers with number 1003.

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Length: 41 pages
Date of creation: Jun 2010
Date of revision: Jun 2010
Handle: RePEc:iep:wpidep:1003
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  1. 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.
  2. 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.
  3. David Card & Alexandre Mas & Jesse Rothstein, 2007. "Tipping and the Dynamics of Segregation," NBER Working Papers 13052, National Bureau of Economic Research, Inc.
  4. 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).
  5. repec:cup:cbooks:9780521698221 is not listed on IDEAS
  6. 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, vol. 116(5), pages 773-809, October.
  7. 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.
  8. 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.
  9. 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.
  10. John Yinger, 1998. "Evidence on Discrimination in Consumer Markets," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 23-40, Spring.
  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. Cutler, David & Vigdor, Jacob & Glaeser, Edward, 1999. "The Rise and Decline of the American Ghetto," Scholarly Articles 2770033, Harvard University Department of Economics.
  13. Gabriel DESGRANGES & Étienne WASMER, 2000. "Appariements sur le marché du logement," Annales d'Economie et de Statistique, ENSAE, issue 58, pages 253-287.
  14. 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.
  15. 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.
  16. repec:cup:cbooks:9780521875387 is not listed on IDEAS
  17. 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.
  18. 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.
  19. 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.
  20. Kevin Lang, 2007. "Introduction to Poverty and Discrimination
    [Poverty and Discrimination]
    ," Introductory Chapters, Princeton University Press.
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