What's the melting pot worth? : multiculturalism and house prices / Rachel Cho, Hisham Farag, Christoph Görtz, Danny McGowan, Huyen Nguyen, Max Schröder ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association

Abstract

Is there a multicultural neighborhood price premium? We exploit plausibly exogenous variation in British colonization patterns in Northern Ireland during the early 1600s which created neighborhoods of varying religious composition that persists until today. These religious groups are culturally distinct, but are observationally equivalent ethnically and socioeconomically. A standard deviation increase neighborhood-level multiculturalism raises house prices by 9.6%. Multiculturalism raises property prices by increasing asset liquidity and housing demand as a wider spectrum of society demand houses in these areas. The findings and mechanism contrast sharply with prior evidence showing negative relationships due to homophily, social networks, and identification challenges.