Ethnic Discrimination on an Online Marketplace of Vacation Rentals

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 13.09.2016, 12:15 - 13:30

   

Presentation by 

Roland Rathelot (University of Warwick)
   

Abstract:

We use data from an online marketplace of vacation rentals (Airbnb) collected in 19 major cities in North America and Europe to measure discrimination against ethnic-minority hosts. For our purpose, this market has three interesting features: the existence of a detailed reviewing system, the high frequency of transactions and the panel dimension of the data. We take advantage of these features to measure the influence of better signals on prices and provide a credible measure of the extent of statistical discrimination, following a strategy la Altonji and Pierret (2001). Hosts belonging to an ethnic minority charge 16% less than majority hosts in the same cities. Controlling for a rich set of characteristics reduces the ethnic price gap to 3%. An additional review increases the price more for minority than for majority hosts. Estimating the parameters of a theoretical pricing model, we find that statistical discrimination can account for the whole ethnic price gap.

   
   
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