Neighbor Discrimination. Theory and Evidence from the French Rental Market

Abstract

This paper describes a novel concept of customer discrimination in the housing market, neighbor discrimination. We build up a matching model with ethnic externalities where landlords differ in the number of apartments they own within the same building. Larger landlords discriminate more often only if some tenants are prejudiced against the minority group. Testing the null hypothesis whereby minority tenants are equally likely to have a large landlord provides a natural test for the existence of neighbor discrimination. In an empirical application, we show that this null hypothesis is rejected for African immigrants in the French private rental market. We then show that the local proportion of large landlords is positively correlated with African tenants' probability of living in public housing, whereas this is not the case of other demographic groups.JEL codes: R21, J71.

Do elections affect immigration? Evidence from French municipalities

“…In contrast to most local policies, a large literature discussed below suggests that the municipal provision of public housing units, for which we report strong evidence of partisanship, is targetable to specific subgroups in the population. In addition, immigrants (and, more specifically, non-European immigrants) are particularly attracted to public housing, to a large extent in response to discrimination in private housing (Acolin et al, 2016;Verdugo, 2016;Combes et al, 2018). As we document below, over the period, the share of non-European immigrant households among public housing inhabitants increased dramatically, reflecting both an increase in their share in the population and an increase in their participation in public housing.…”

Introducing a vignette experiment to study mechanisms of ethnic discrimination on the housing market

“…This behavior could lead to costs for the agent, being the loss of a potential rental candidate for a dwelling that is under the realtor’s supervision. This cost is taken into account by the agent which contributes to the argument that this form of behavior is a conscious and intentional act [ 14 , 24 ].…”

“…Results from a recent literature review on mechanisms of discrimination on the labor market by Lippens [ 13 ] pointed out that due to the lack of consistent evidence of the two dominant economic mechanisms it is hard to argue that discrimination can be fully explained by either one. Attempts to add nuance to these mechanisms on the housing market such as Combes and colleagues’ “neighbor discrimination” or Verstraete and Verhaeghe’s “owner taste-based mechanism” add complexity to the drivers of rental discrimination and should be elaborated further [ 14 , 15 ].…”

Dreaming of Leaving the Nest? Immigration Status and the Living Arrangements of Dacamented

“…Previous studies also documented the extent of discrimination that racial, ethnic, and sexual minorities face in housing markets (Combes et al, 2018;Edelman et al, 2017). Audit studies have revealed that agents and rental housing providers show fewer available homes and apartments to minorities than equally qualified whites (Page, 1995).…”