Racial Rent Differences in U.S. Housing Markets

36 Pages Posted: 13 Jul 2018  

Dirk W. Early

Southwestern University - Department of Economics and Business

Paul E. Carrillo

George Washington University - Department of Economics

Edgar O. Olsen

University of Virginia - Department of Economics

Date Written: June 18, 2018

Abstract

This paper exploits an unusually rich data set to estimate racial differences in the rents paid for identical housing in the same neighborhood in U.S. housing markets and how they vary with neighborhood racial composition. It overcomes the shortcomings of the data used in previous studies. It is large (over 400,000 observations), covers all parts of the country, and contains detailed information about the housing units and their immediate neighborhoods and the census block group of each unit. Importantly, due to the sample size, there are many blacks living in predominantly white neighborhoods and many whites in predominantly black neighborhoods. Results suggest that households led by blacks pay more for identical housing in identical neighborhoods than their white counterparts and that this rent gap increases with the fraction of the neighborhood white. In neighborhoods with the smallest fraction white, the premium is about 0.6 percent. In neighborhoods with the largest fraction white, it is about 2.4 percent. This pattern holds across different types of areas, namely the 50 largest metro areas, all other metro areas, non-metro areas, and areas with the highest and lowest levels of racial segregation in housing.

Keywords: racial discrimination, housing discrimination, racial rent differences, racial price differences

JEL Classification: R2, R3, J15, K25

Suggested Citation

Early, Dirk W. and Carrillo, Paul E. and Olsen, Edgar O., Racial Rent Differences in U.S. Housing Markets (June 18, 2018). Available at SSRN: https://ssrn.com/abstract=3200655 or http://dx.doi.org/10.2139/ssrn.3200655

Dirk W. Early (Contact Author)

Southwestern University - Department of Economics and Business ( email )

1001 East University Avenue
Georgetown, TX 78626
United States
513-863-1592 (Phone)

Paul E. Carrillo

George Washington University - Department of Economics ( email )

Monroe Hall Suite 340
2115 G Street NW
Washington, DC 20052
United States

Edgar O. Olsen

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
434-924-3443 (Phone)
434-924-2904 (Fax)

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