Living apart together: The economic value of ethnic diversity in cities

J. Bakens*, R.J.G.M. Florax, H.L.F. de Groot, P. Mulder

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


In consumer cities, the presence and location of immigrants impacts house prices through two channels, which both can be valued positively as well as negatively: (i) their presence and contribution to population diversity and (ii) the creation of immigrant-induced consumer amenities like those associated with ethnic restaurants in terms of both their quantity as well as diversity. We hypothesize that these two mechanisms create a trade-off in which city dwellers want to live apart yet consume together. We use unique microdata of house prices and ethnic restaurants in the city of Amsterdam over the 1996-2011 period and a generalized propensity score (GPS) matching technique for multiple continuous treatments to estimate the trade-off between consumers' love for ethnic goods and their variety on the one hand, and ethnic residential composition on the other hand. We find evidence for the existence of such a trade-off: proximity to ethnically diverse restaurants indeed compensates for a negative correlation between the presence of immigrants and house prices. This trade-off mostly holds for neighborhoods featuring both a diverse population and a high level of amenities in terms of restaurants.
Original languageEnglish
Article number23998083221082112
Pages (from-to)2267-2282
Number of pages16
JournalEnvironment and Planning B: Urban Analytics and City Science
Issue number8
Early online date8 Apr 2022
Publication statusPublished - Oct 2022

JEL classifications

  • d12 - Consumer Economics: Empirical Analysis
  • d62 - Externalities
  • j15 - "Economics of Minorities, Races, and Immigrants; Non-labor Discrimination"
  • r10 - General Regional Economics (includes Regional Data)


  • amenities
  • diversity
  • immigrants
  • hedonic pricing
  • propensity score matching


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