Ethnic diversity and neighborhood house prices

Qiang Li

Regional Science and Urban Economics, 2014, vol. 48, issue C, 21-38

Abstract: In recent decades, the large influx of immigrants to the U.S. and other developed countries has made cities in these countries more ethnically diverse. In this paper, I aim to understand whether and how ethnic diversity affects communities in these cities. A general equilibrium model is built in which people of many ethnic groups interact in the housing market through both price signals and non-market mechanisms. An endogenous correlation between neighborhood house price and the Herfindahl index of ethnic concentration arises because of social interactions. After addressing the endogeneity issue, I find that neighborhoods with more homogeneous minority populations command higher prices using a dataset of housing transactions and neighborhood socio-economic characteristics in Vancouver, Canada. This and other findings support the notion that non-market social interactions influence people's preference and behavior.

Keywords: Ethnic diversity; Housing; Neighborhood choice (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:48:y:2014:i:c:p:21-38

DOI: 10.1016/j.regsciurbeco.2014.04.007

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