Ethnic Discrimination in the Market for Shared Housing

In major international cities, the difficulty of finding affordable housing has often resulted in an increased demand for shared housing, i.e. sharing an apartment/house with others. However, a policy-relevant question is if this very informal market is equally available to everyone regardless of ethnic background. To investigate this, we conduct a field experiment in the London market for shared housing. In the experiment, we send fictitious applications, with a randomly assigned name signalling a British, Eastern-European, Indian, African or Arabic background, to more than 5,000 room advertisers. Our main finding is that ethnic discrimination is widespread. The situation is worst for applicants with an Arabic name, while applicants with an Eastern-European name are least affected and applicants with an African or Indian name are found somewhere in-between. Moreover, the results indicate that a substantial fraction of these differences reflects statistical discrimination. Finally, we find that the degree of discrimination varies with the ethnic residential concentration. This suggests that discrimination contributes to maintaining the current situation in London, where ethnic minorities tend to live in certain areas and often separated from the ethnic majority