What's The Melting Pot Worth? Multiculturalism and House Prices

Rachel Cho (), Hisham Farag (), Christoph Gortz (), Danny McGowan (), Huyen Nguyen () and Max Schroeder ()

No 571, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: Is there a multicultural neighbourhood price premium? We exploit plausibly exogenous variation in British colonization patterns in Northern Ireland during the early 1600s which created neigh bourhoods of varying religious composition that persists until today. These religious groups are culturally distinct, but are observationally equivalent ethnically and socioeconomically. A standard deviation increase neighbourhood–level multiculturalism raises house prices by 9.6%. Multiculturalism raises property prices by increasing asset liquidity and housing demand as a wider spectrum of society demand houses in these areas. The findings and mechanism contrast sharply with prior evidence showing negative relationships due to homophily, social networks, and identification challenges.

Keywords: Multiculturalism; House prices; Homophily; Segregation (search for similar items in EconPapers)
JEL-codes: D1 G5 R21 R31 (search for similar items in EconPapers)
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