Do Birds of a Feather Flock Together? The Impact of Ethnic Segregation Preferences on Neighbourhood Choice

Ethnic residential segregation can arise from voluntary or imposed clustering of some ethnicities in specific urban areas. However, up to now it has been difficult to untangle the real causes underlying the segregation phenomena. In particular, voluntary segregation preferences could not be revealed from the observed location choices given the existence of constraints in the real housing market. This study aims at analysing the voluntary segregation drivers through a stated preferences experiment of neighbourhood choice. This method obviates the choice-constraint issue by allowing a hypothetically free choice of alternative urban locations. The results suggest that ethnic preferences exist, positive for co-national neighbours and negative for other foreign groups. However, such preferences do not constitute a major location choice driver given relatively modest willingness-to-pay for ethnic neighbourhood characteristics. Certain heterogeneity in preferences for higher concentration of own co-nationals is captured for households of different origins and educational attainment.