Terrorism and attitudes towards minorities: The effect of the Theo van Gogh murder on house prices in Amsterdam

Does fundamentalist-Islamic terrorism have an effect on the general attitudes towards Muslim minorities? We use the murder of Theo van Gogh as an event study to address this question. Specifically, we use the hedonic-market model and test for an effect on listed house prices in neighborhoods where more than 25% of the people belong to an ethnic minority from a Muslim country (type I). Relative to the other neighborhoods, house prices in type I neighborhoods decreased in 10 months by about 3%, with a widening gap over time. Our results are robust to several adjustments including using synthetic control groups. Finally, we find evidence that segregation increased. People belonging to the Muslim minority were more likely to buy and less likely to sell a house in a type I neighborhood after the murder than before.