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Estimating the Distortionary Effects of Ethnic Quotas in Singapore Using Housing Transactions

Working paper #757
Maisy Wong

Desegregation is a key policy issue in many countries. I investigate a residential desegregation program in Singapore—the ethnic housing quotas. I show that choice restrictions imposed on apartment blocks above the quota limits (constrained) could have distortionary effects, causing price and quantity differences for constrained versus unconstrained blocks. I test these predictions by hand—matching more than 500,000 names in the phonebook to ethnicities, to calculate ethnic proportions at the apartment block level. I can then investigate differences for constrained and unconstrained blocks close to the quota limits and test for sorting around the limits. I find price differences are between 3 percent and 5 percent. Quantity effects are economically significant, translating to longer time-on-market durations by 1 to 1.4 months. Selection cannot fully explain these results. My results point to challenges in achieving desegregation using quantity restrictions.

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