Luxembourg Institute of Socio-Economic Research (LISER)
Maison des Sciences Humaines
11, Porte des Sciences
L-4366 Esch-sur-Alzette / Belval
LISER Salle de Conference, 1st Floor
We exploit data on the universe of homeowners, housing transactions, and exogenous changes in air quality to examine how changes in exposure to air pollution over the past two decades have altered the disparities in home values between Black and White homeowners. We find that air quality capitalization rates are significantly lower for Black homeowners. Despite secular trends that have reduced the black-white pollution exposure gap, this difference in capitalization rates is large enough to yield a net increase in disparities in housing values. An exploration of mechanisms suggests that roughly one-quarter of this difference is the result of direct discrimination while the remaining two-thirds can be attributed to systemic discrimination through differential access to complementary amenities.