Discrimination in the rental housing market for apartments

Discrimination in the housing market may create large inefficiencies, but is difficult to measure. To circumvent the problems with unobserved heterogeneity, most recent studies use the correspondence testing approach (i.e. sending fictitious applications to landlords). In this study, we extend the existing methodology by (i) randomly assigning all relevant applicant characteristics to the applications, and (ii) carefully taking into account the interactions between applicant, landlord, apartment and regional characteristics. Then, we demonstrate how this approach can be implemented by considering how an applicant’s gender, ethnicity, age and employment status affect the probability of being invited to an apartment viewing in the Swedish housing market. Our results confirm the existence of widespread discrimination, but also show that the degree of this discrimination varies substantially with applicant, landlord, apartment and regional characteristics. This heterogeneity highlights the importance of using of using a broad approach when conducting correspondence studies