Title:	Modelling Segregation Processes in Hybrid Housing Markets
DNr:	NAISS 2024/22-393
Project Type:	NAISS Small Compute
Principal Investigator:	Eduardo Tapia <eduardo.tapia@liu.se>
Affiliation:	Linköpings universitet
Duration:	2024-04-01 – 2024-08-01
Classification:	50401
Keywords:

Abstract

Models of segregation dynamics, like Schelling’s classic model, often employ superficial treatments of actual housing allocation mechanisms. Moves are friction-less and cost-less and depend only on local neighborhood compositions. But actual housing markets are shaped by economic inequality, the built environment, and rules governing access to different kinds of housing, where housing is distinguished by its physical form, density, and the legal rights to occupancy. For example, while owner occupied units are typically distributed according to an auction process, where available units are awarded to the highest bidder, rental housing is often given to the first acceptable applicant willing to meet the landlord’s asking price. However, in many countries with strong social welfare states, housing is not only distributed through a market logic, like that sketched above, but also through non-market institutions where a non-trivial fraction of the housing stock is owned by governmental authorities. Much of this housing is covered by rent control laws or agreements and cannot be allocated on the basis of pricing alone. Often allocation is done through enrollment in a housing queue. People who have waited the longest have priority when a unit becomes available. In addition to following different allocation rules, market and non-market housing is often unevenly distributed across space. Market-based housing is often associated with single family homes in less dense neighborhoods, while non-market housing is often located in multi-family buildings in denser neighborhoods. Increasingly, much of the non-market housing is located in the dense urban periphery, while market-based housing is found in desirable center city areas and more well-to-do suburbs as governments adopt a more privatized, market-based approach to housing provision. Empirical studies suggest that the prevalence and uneven distribution of different types of housing—rental vs. ownership, market vs. non-market—are related to patterns of ethnic segregation, but the precise conditions and dynamics that give rise to this segregation are not well understood. In this study, we develop a simulation model to consider the implications of the relative prevalence and geographic distribution of market and non-market housing, for processes of ethnic segregation. While a few dynamic segregation models have incorporated inequality and housing prices, they have typically done so using an idiosyncratic market logic, with housing prices set based on the neighborhood attributes, not competitive bidding. These models have not considered the possibility that a segment of the housing stock will be allocated according to non-market rules. This paper addresses this gap in our understanding. We do so by programming an agent-based model (ABM) of a hybrid housing market. In our ABM, we construct cities with varying shares of market vs. non-market housing and also vary the extent to which this housing is unevenly distributed in space. We populate the cities with ethnic groups with different resource (i.e., income and queue position) distributions and set them in motion. Agents compete over market-based and non-market housing.