Estimating the distortionary effects of ethnic quotas in Singapore using housing transactions

• I study the ethnic housing quotas in Singapore using housing transactions.
• I matched 500,000 names in phonebooks to ethnicities to construct ethnic proportions.
• Transaction outcomes are different between constrained and unconstrained blocks.
• Selection effects cannot fully account for these differences.
• Thin housing markets and inelastic preferences present challenges to desegregation.

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 that price differences are between 3% and 5%. Quantity effects are economically significant, translating to longer time-on-market durations. Selection cannot fully explain these results. My results point to challenges in achieving desegregation using quantity restrictions.