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Minorities and property values: Evidence from residential buildings in Israel

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  • Elster, Yael
  • Zussman, Noam

Abstract

This study estimates, for the first time, individuals valuation of living in a building with a member of a minority, by exploiting unique restricted data on about a third of Israel’s neighborhoods. We rely on the hedonic approach and use a difference-in-differences identification strategy, comparing nearby buildings that experienced either early or late entry of minorities. We find that house prices declined by 2–3% after the first move-in of Israelis of Ethiopian origin or ultra-Orthodox Jews. Our analysis shows that New-immigrants only significantly affect prices during a massive migration wave (-10%) and indicate that Israeli Arabs do not affect prices. Results are not driven by (a) the socio-demographic profile of the minorities who enter, (b) the difference between their profile and the existing residents profile, (c) buyers and sellers profiles after the first minority entrance or (d) neighborhood characteristics. The findings support the hypothesis of segregation due to discrimination.

Suggested Citation

  • Elster, Yael & Zussman, Noam, 2024. "Minorities and property values: Evidence from residential buildings in Israel," Journal of Urban Economics, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:juecon:v:141:y:2024:i:c:s0094119022001012
    DOI: 10.1016/j.jue.2022.103525
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    More about this item

    Keywords

    Residential segregation; Minorities; Housing market; Israel;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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