This paper uses a change in social housing policy to study the effects of ethnic composition on local population growth and on house prices in England and Wales. Our quasi-experimental approach exploits increased access to social housing by ethnic minorities in the early 1990s to instrument for changes in ethnic composition at the local neighbourhood level. By creating a dataset of highly disaggregated Census geographies with consistent boundaries for the last three decades, we estimate the effect of composition changes from variation across neighbourhoods within cities. The results show that an exogenous increase in ethnic minority households in social housing leads to higher shares of minority population in private housing, higher population growth and lower house prices in the local area. An increase in the ethnic minority share in local social housing by 10 percentage points raises the minority share in private housing by 2.6 percentage points, and this effect is more pronounced for privately rented than for privately owned housing. A 10 percentage point increase in minority share in private housing decreases the growth rate of local house prices by 0.4 percent. |
