Neighbor Discrimination. Theory and Evidence from the French Rental Market

55 Pages Posted: 9 Nov 2016

See all articles by Pierre-Philippe Combes

Pierre-Philippe Combes

Université de Lyon; Sciences Po - Department of Economics; Centre for Economic Policy Research (CEPR)

Benoît Schmutz

Howard University

Bruno Decreuse

University of Angers - Research Group in Quantitative Saving (GREQAM); Ecole des Hautes Etudes en Sciences Sociales (EHESS)

Alain Trannoy

National Center for Scientific Research (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS)

Date Written: October 18, 2016

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 being confined to public housing projects, whereas this is not the case of other demographic groups.

Keywords: Customer Discrimination, Matching frictions, Neighborhood Externalities, Housing

JEL Classification: R21, J71

Suggested Citation

Combes, Pierre-Philippe and Schmutz, Benoît and Decreuse, Bruno and Trannoy, Alain, Neighbor Discrimination. Theory and Evidence from the French Rental Market (October 18, 2016). Available at SSRN: https://ssrn.com/abstract=2866997 or http://dx.doi.org/10.2139/ssrn.2866997

Pierre-Philippe Combes

Université de Lyon ( email )

92 Rue Pasteur
Lyon, 69007
France

Sciences Po - Department of Economics ( email )

28, rue des Saints peres
Paris, 75007
France

HOME PAGE: http://https://www.gate.cnrs.fr/ppcombes

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Benoît Schmutz (Contact Author)

Howard University ( email )

2400 Sixth Street, NW
Washington, DC 20059
United States

Bruno Decreuse

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

Ecole des Hautes Etudes en Sciences Sociales (EHESS)

54, boulevard Raspail
Paris, 75006
France

Alain Trannoy

National Center for Scientific Research (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) ( email )

54, boulevard Raspail
Paris, 75006
France

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