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Ethnic segregation and heterogeneous preferences of homeowners for housing and neighbourhood characteristics: evidence from the Netherlands

Cheng Boon Ong and Kristof De Witte

No 2013-061, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: This paper examines ethnically differentiated preferences for neighbourhood ethniccomposition among homeowners in the Netherlands. Borrowing from price hedonic theory, it tests a fully nonparametric empirical model of housing choice. We exploit rich neighbourhood-level administrative data linked to the 2009 Dutch Housing and Living Survey. The nonparametric analysis proceeds in two steps. First, housing prices are decomposed into attribute-specific implicit prices. These price hedonic estimates indicate a significant negative effect of the percentage of non-western minority residents in a neighbourhood on housing prices. For the second step and using the recovered household preference parameters, the marginal willingness to pay for an increase in non-western minority neighbours is estimated. Our model predicts an average decrease in dwelling price of 697 for every 10 per cent increase in non-western neighbours. The paper finds evidence of assimilation with some homeowners of non-western migrant background having a negative willingness to pay for living next to more co-ethnic neighbours.

Keywords: Household Analysis; Housing Demand; Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics; Housing Supply and Markets (search for similar items in EconPapers)
JEL-codes: R20 R21 R23 R31 R32 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-dcm and nep-dem
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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