Discussion Papers No. 547, June 2008 Statistics Norway, Research Department Timothy K.M. Beatty and Dag Einar Sommervoll Discrimination in Europe Evidence from the Rental Market Abstract: This paper considers statistical discrimination in rental markets, using a rich data set on rental contracts from Norway. We find that tenants born abroad pay a statistically significant and economically important premium for their dwelling units after controlling for a comprehensive set of apartment, individual and contract specific covariates. We also find that the premium is largest for tenants of African origin. Moreover, the children of parents born abroad also face a statistically significant and economically important rental premium. Keywords: Statistical Discrimination, Rental Markets, Hedonic Regression JEL classification: J15, R21 Address: Timothy K.M. Beatty, Department of Economics, University of York. E-mail: Dag Einar Sommervoll, Research Department, Statistics Norway. E-mail:
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[email protected] 1. Introduction Price discrimination is consistent with profit maximizing behavior. Discrimination based on ethnicity is inconsistent with societal norms as expressed in national and international law.