A Household-Level Decomposition of the White-Black Homeownership Gap

31 Pages Posted: 1 Dec 2010 Last revised: 1 Mar 2012

See all articles by Eric Fesselmeyer

Eric Fesselmeyer

National University of Singapore (NUS) - Department of Economics

Kien T. Le

University of Virginia

Kiat Ying Seah

National University of Singapore (NUS)

Date Written: May 25, 2011

Abstract

This paper uses a semiparametric homeownership model to estimate and to decompose the household-level white-black homeownership gap into an endowment component and a residual component across the distribution of homeownership rates. We find that the racial gap differs across homeownership rates and that studies that examine the gap only at the mean may be misleading. We also find that although household characteristics explain the homeownership gap for most households, there is a substantial portion of the gap that remains unexplained for households with a very low propensity to own homes. A comparison of the estimates from the semiparametric model and a probit model suggests that the semiparametric approach is able to capture the heterogeneity structure between the ethnic groups, particularly in the tails of the distribution. To illustrate the flexibility of our household-level approach, we decompose the homeownership gap in cities of varying levels of segregation.

Keywords: Homeownership, Race, Segregation

JEL Classification: C14, R20, R21, R23, J1

Suggested Citation

Fesselmeyer, Eric and Le, Kien T. and Seah, Kiat Ying, A Household-Level Decomposition of the White-Black Homeownership Gap (May 25, 2011). Regional Science and Urban Economics, Vol. 42, No. 1-2, 2012. Available at SSRN: https://ssrn.com/abstract=1716972 or http://dx.doi.org/10.2139/ssrn.1716972

Eric Fesselmeyer

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore, Singapore 117570
Singapore

Kien T. Le

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

Kiat Ying Seah (Contact Author)

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

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