# RECORD 4a0a05883004ee538ec38fa812f7d2e81fdd4eb9
# TITLE: Do Foreigners Pay Higher Rents for the Same Quality of Housing in Geneva and Zurich?
# YEAR: 2008.0  VENUE: nan  DOI: 10.1007/bf03399272
# AUTHORS: A. Baranzini; C. Schaerer; J. Ramirez; P. Thalmann
# PAGES: 28  CANDIDATE TABLE PAGES (1-based): [18, 19, 20, 23]
# ABSTRACT: SummaryThe Geneva and Zurich housing markets are characterised by high proportions of foreigners and a large share of rental housing. This provides ideal conditions for testing whether foreigners pay more for the same quality of housing than Swiss households and whether flats in neighbourhoods with higher proportions of foreigners rent at a discount. Hedonic price equations using a rich dataset on dwellings and their occupants yield evidence of such discrimination and prejudice. They also suggest more complex relationships between tenant nationality, housing and neighbourhood quality, and rents.


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© Swiss Journal of Economics and Statistics 
2008, Vol. 144 (4) 703–730
a 
Geneva School of Business Administration (HEG-Ge), Center for Applied Research in Man-
agement (CRAG), University of Applied Sciences of Western Switzerland (HES-SO), 7 route 
de Drize, CH-1227 Carouge, Geneva, Switzerland. Andrea.Baranzini@hesge.ch; Jose.Rami-
rez@hesge.ch; Caroline.Schaerer@hesge.ch
b 
Swiss Institute of Technology Lausanne (EPFL), Research Group on the Economics and Man-
agement of the Environment (REME), Station 16, 1015 Lausanne, Switzerland. Philippe.Thal-
mann@epfl.ch
 
Acknowledgements:We are grateful for financial support from the Swiss National Science Foun-
dation, National Research Programme NRP 54 “Sustainable Development of the Built Envi-
ronment”. We thank the Swiss Federal Statistical Office for providing the data of the 2000 
Swiss Population Census; the Geneva and Zurich Cantonal Offices for protection against noise 
for the noise data; the Information System of the Geneva Territory (Système d’Information 
du Territoire Genevois, SITG) and the Zurich GIS-centre of the office of land use regulation 
and measurement (GIS-Zentrum des Amtes für Raumordung und Vermessung des Kantons 
Zürich, ARV) for providing the GIS data. A special thank to Eva Robinson for excellent assist-
ance support in calculating GIS variables. None of these institutions or persons is responsible 
for or endorses in any way the contents of this paper.
Do Foreigners Pay Higher Rents for the Same Quality  
of Housing in Geneva and Zurich?
Andrea Baranzinia, Caroline Schaerera, José V. Ramireza  
and Philippe Thalmannb
JEL-Classification: R31, R52, D63
Keywords: housing market, rental market, hedonic model, discrimination, prejudice
1. Introduction
Residential segregation and discrimination have been extensively studied in the 
United States, which exhibits large proportions of ethnic minorities, often very 
concentrated in well-defined areas. In Western Europe, the problem of ghettos 
in which more than 70 per cent of the area’s inhabitants are of a minority group 
is scarcer. In fact, Western European countries often comprise a mix of different 
minority populations (see Huttman, 1991, and Harrison, Law and Phillips, 
2005). Furthermore, minorities are more identified by geographic origin than by 
ethnicity. Indeed, international migration is high and integration and assimila-
tion may be less rapid than in the USA.


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720 
Baranzini / Schaerer / Ramirez / Thalmann
Table 2: Results Model 1, Model 2 and Model 2-fix 
Geneva
Zurich
Dependent variable: ln(net monthly rent)
Model 1
Model 2
Model 2-fix
Model 1
Model 2
Model 2-fix
Structural characteristics
Built between 1946 and 1960
−0.0775***
(0.0041)
−0.0743***
(0.0043)
−0.0681***
(0.0043)
0.0075*
(0.0042)
0.0074*
(0.0042)
0.0089**
(0.0043)
Built between 1961 and 1970
−0.0651***
(0.0042)
−0.0576***
(0.0043)
−0.0405***
(0.0043)
0.0538***
(0.0046)
0.0535***
(0.0046)
0.0579***
(0.0047)
Built between 1971 and 1980
0.0791***
(0.0047)
0.0820***
(0.0044)
0.0876***
(0.0045)
0.0692***
(0.0053)
0.0693***
(0.0053)
0.0766***
(0.0054)
Built between 1981 and 1990
0.2113***
(0.0056)
0.2064***
(0.0051)
0.2070***
(0.0052)
0.3006***
(0.0057)
0.2994***
(0.0058)
0.3011***
(0.0058)
Built between 1991 and 2000
0.0620***
(0.0057)
0.0618***
(0.0058)
0.0723***
(0.0059)
0.1975***
(0.0061)
0.1968***
(0.0061)
0.2059***
(0.0063)
Building was renovated before 1990
0.0234***
(0.0059)
0.0179***
(0.0062)
0.0169***
(0.0062)
0.0096**
(0.0042)
0.0095**
(0.0042)
0.0084**
(0.0041)
Floor level
0.0188***
(0.0006)
0.0194***
(0.0007)
0.0196***
(0.0006)
0.0108***
(0.0008)
0.0111***
(0.0008)
0.0113***
(0.0008)
Number of floors in the building
−0.0058***
(0.0007)
−0.0068***
(0.0007)
−0.0065***
(0.0007)
0.0005
(0.0006)
0.0004
(0.0006)
0.0019***
(0.0006)
Number of rooms
0.2703***
(0.0014)
0.2677***
(0.0015)
0.2639***
(0.0016)
0.2750***
(0.0016)
0.2745***
(0.0016)
0.2728***
(0.0016)
Surface per room [m2]
0.0154***
(0.0002)
0.0151***
(0.0003)
0.0143***
(0.0003)
0.0133***
(0.0003)
0.0132***
(0.0003)
0.0129***
(0.0003)


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Do Foreigners Pay Higher Rents for the Same Quality of Housing? 
721
Geneva
Zurich
Dependent variable: ln(net monthly rent)
Model 1
Model 2
Model 2-fix
Model 1
Model 2
Model 2-fix
Surface per inhabitant [m2]
0.0003***
(0.0001)
0.0003***
(0.0001)
0.0002***
(0.0001)
0.0005***
(0.0001)
0.0006***
(0.0001)
0.0006***
(0.0001)
Kitchenette
−0.0755***
(0.0072)
−0.0792***
(0.0071)
−0.0791***
(0.0071)
−0.0761***
(0.0076)
−0.0780***
(0.0075)
−0.0872***
(0.0076)
Attic
0.0235***
(0.0073)
0.0228***
(0.0079)
0.0252***
(0.0077)
0.0316***
(0.0061)
0.0313***
(0.0061)
0.0345***
(0.0061)
Gas heating
0.0169***
(0.0035)
0.0246***
(0.0037)
0.0278***
(0.0036)
0.0485***
(0.0035)
0.0486***
(0.0035)
0.0513***
(0.0035)
Privately owned building
0.0627***
0.0659***
0.0588***
0.1182***
0.1182***
0.1169***
(0.0029)
(0.0029)
(0.0029)
(0.0032)
(0.0032)
(0.0032)
Publicly owned building
−0.1170***
(0.0057)
−0.1277***
(0.0060)
−0.1160***
(0.0062)
−0.2517***
(0.0058)
−0.2507***
(0.0058)
−0.2549***
(0.0058)
Same tenant for at least 5 years
−0.1615***
(0.0027)
−0.1613***
(0.0027)
−0.1609***
(0.0026)
−0.1287***
(0.0029)
−0.1273***
(0.0029)
−0.1270***
(0.0029)
Location characteristics
Distance to nearest transportation stop [km]
−0.1021***
(0.0226)
−0.1261***
(0.0218)
−0.1081***
(0.0223)
−0.1521***
(0.0223)
−0.1523***
(0.0223)
−0.0979***
(0.0219)
Distance to nearest park [km]
0.1000***
(0.0148)
0.1266***
(0.0143)
0.0064
(0.0156)
0.0465***
(0.0160)
0.0449***
(0.0160)
0.0026
(0.0162)
Distance to city centre [km]
−0.0117***
(0.0013)
−0.0106***
(0.0012)
0.0218***
(0.0036)
−0.0392***
(0.0012)
−0.0390***
(0.0012)
−0.0416***
(0.0018)
Table 2 (continued)


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722 
Baranzini / Schaerer / Ramirez / Thalmann
Geneva
Zurich
Dependent variable: ln(net monthly rent)
Model 1
Model 2
Model 2-fix
Model 1
Model 2
Model 2-fix
% of parks in the district (x100)
0.3660***
(0.0306)
0.3778***
(0.0303)
0.3262***
(0.0258)
0.3259***
(0.0259)
% of trees in the district (x100)
−0.1668***
(0.0217)
−0.2104***
(0.0212)
−0.1134***
(0.0116)
−0.1132***
(0.0117)
Population density [per ha] (x100)
−0.0258***
(0.0013)
−0.0205***
(0.0013)
−0.0182***
(0.0014)
−0.0298***
(0.0021)
−0.0295***
(0.0022)
−0.0230***
(0.0022)
Environmental characteristics
Daytime noise [dB(A)] (x100)
−0.2828***
(0.0318)
−0.1854***
(0.0318)
−0.2784***
(0.0332)
−0.3599***
(0.0413)
−0.3591***
(0.0422)
−0.4062***
(0.0436)
Household head characteristics
Foreigner
0.0227***
(0.0028)
0.0217***
(0.0028)
0.0260***
(0.0033)
0.0261***
(0.0033)
Neighbourhood composition
% of foreigners [per ha] (x100)
−0.2222***
(0.0118)
−0.0899***
(0.0134)
−0.0197*
(0.0107)
0.0826***
(0.0118)
N
42162
42162
42162
26489
26489
26489
R2
0.6285
0.6318
0.6417
0.6689
0.6696
0.6769
Notes: *** significant at the 0.01 level; ** significant at the 0.05 level; * significant at the 0.10 level. The reference period of construction is before 
1946 and the reference type of owner is institutional.
Table 2 (continued)


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Do Foreigners Pay Higher Rents for the Same Quality of Housing? 
723
If the same household has been living in the dwelling for the past five years at 
least, the 2000 rent is about 18 per cent lower in Geneva and about 14 per cent 
lower in Zurich compared to a more recent lease. This confirms the suspicion 
that landlords generally seize the opportunity to raise the rent at changes in ten-
ancy (see Thalmann, 1987). Concerning the environmental variables, an addi-
tional decibel of road traffic noise during the day decreases the rent by about 0.3 
per cent on average in Geneva and 0.4 percent in Zurich. Proximity to the city 
centre and public transport stops raises rents while proximity to parks lowers 
them. These results are comparable to the findings from other hedonic studies 
using alternative databases for the Geneva (see e.g. Baranzini and Ramirez, 
2005; Baranzini and Schaerer, 2007) and Zurich markets (see e.g. Banfi, 
Filippini and Horehajova, 2008; Schaerer, Baranzini, Ramirez and Thal-
mann, 2007).
We now turn to the variables related to discrimination and prejudice. In both 
Geneva and Zurich, the coefficients associated with the nationality of the indi-
vidual are statistically significant and positive, which hints at discrimination 
since this implies that for a dwelling with the same characteristics a foreigner pays 
2.3 per cent more in Geneva and 2.6 per cent more in Zurich than a Swiss. The 
statistically significant and negative coefficients associated with the proportion 
of foreigners in Model 2 suggest prejudice in Geneva and Zurich, since tenants 
need to be compensated for living in a neighbourhood with a higher share of for-
eigners. As already discussed, this finding has however to be tested further, since 
the proportion of foreigners could be correlated with other neighbourhood char-
acteristics (cf. Harris, 1999; Bayer, Ferreira and McMillan, 2007; Bayer 
and MacMillan, 2008). Indeed, by introducing neighbourhood fixed effects 
in Model 2-fix, we observe that the coefficients decrease quite considerably in 
absolute value, from –0.22 to –0.09 in Geneva. This implies that prejudice is 
over-estimated in Model 2, because part of the neighbourhood unobserved char-
acteristics are correlated with the share of foreigners. This also means that on 
average the unobserved quality of neighbourhoods populated by higher shares of 
foreigners is lower than that of neighbourhoods inhabited by a greater proportion 
of Swiss (which need not imply that overall quality is lower, i.e. including the 
observed qualities of quietness and accessibility). For Zurich, the coefficient in 
Model 2-fix becomes even positive, implying that there is no prejudice, but that 
foreigners are again living in neighbourhoods of lower unobserved quality.
These results should be refined further, since the foreign population in Swit-
zerland is highly heterogeneous in terms of country of origin, education level 
and type of working permit. Therefore we re-estimate Models 2 and 2-fix by 
differentiating foreigners between those coming from OECD and non-OECD 


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Do Foreigners Pay Higher Rents for the Same Quality of Housing? 
725
5. Conclusions
We found evidence of segregation, prejudice and discrimination against foreign-
ers, particularly the less educated ones, in the two largest rental markets of Swit-
zerland, those of Zurich and Geneva. However, the magnitude of these biases is 
not very large, except for low education foreigners who pay between 5 and 7 per 
cent more on average for the same dwelling than low education Swiss. Without 
distinguishing by education level, the penalty imposed on foreigners is about 2 
per cent. That may seem little considering anecdotal evidence of relatively high 
rents charged for lousy housing to recent low-income immigrants or, in a differ-
ent category, of astronomical rents paid by highly qualified foreign employees of 
international firms. Our results do not contradict that anecdotal evidence but 
they remind us that the largest share of foreigners have been living in Switzerland 
Table 3: Results Model 3 and Model 3-fix
Geneva
Zurich
Dependent variable: ln(net monthly rent)
Model 3
Model 3-fix
Model 3
Model 3-fix
Traditional dwelling characteristics
(same as in Table 2)
(…)
(…)
(…)
(…)
Household head characteristics
Low education foreigner
0.0530***
(0.0047)
0.0509***
(0.0047)
0.0677***
(0.0057)
0.0659***
(0.0057)
High education foreigner
0.0934***
(0.0046)
0.0909***
(0.0046)
0.11096***
(0.0051)
0.1092***
(0.0050)
High education Swiss
0.0720***
(0.0040)
0.0690***
(0.0039)
0.09211***
(0.0042)
0.0887***
(0.0041)
Neighbourhood composition [per ha]
% of low education foreigners (x100)
−0.3930***
(0.0139)
−0.2980***
(0.0157)
−0.3219***
(0.0143)
−0.2534***
(0.0159)
% of high education foreigners (x100)
0.4966***
(0.0241)
0.4907***
(0.0245)
0.9178***
(0.0258)
0.9370***
(0.0263)
N
42162
42162
26489
26489
R2
0.6447
0.6495
0.6960
0.6998
Notes: *** significant at the 0.01 level; ** significant at the 0.05 level; * significant at the 0.10 level. 
The reference for the household head is a Swiss with low education level.


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726 
Baranzini / Schaerer / Ramirez / Thalmann
for many years and are well integrated. Remember also that our discrimination 
indicator is quality adjusted, i.e. foreign specialists can still pay a lot for hous-
ing, but they do not necessarily pay significantly more than Swiss specialists for 
the same type of flats.
Of course, reality is more complex than what could be captured by simple pro-
portions of foreigners per hectare or a few coefficients on nationality dummies 
in hedonic price regressions. This is a first step to a more thorough analysis that 
is made possible by the growing wealth of data that we were able to collect. In 
particular, since our results show that foreigners with low education tend to live 
in neighbourhoods of relatively worse unobserved quality both in Geneva and 
Zurich, in a forthcoming companion paper we are more precisely characterising 
the differentials in the living conditions between socio-economic groups. Indeed, 
even if our results show no strong price discrimination against foreigners, it would 
still seem unfair if foreign households occupied systematically dwellings of lower 
quality in less attractive neighbourhoods or if they lived in more crowded situa-
tions and had to spend a higher share of their income for housing (e.g. Thalmann, 
2003). This will also allow for a broader picture about environmental justice. But 
more fundamentally, it would be relevant to develop a structural model taking into 
account the possibility of a market segmentation based on environmental quality 
and to test whether or not foreigners – particularly the less educated ones – have 
a higher probability to live in “low” quality neighbourhoods.
Our results shed light on a few facets of segregation, prejudice and discrimi-
nation. In addition, they show that household characteristics have their place in 
a hedonic price equation, but that the coefficients estimated for the traditional 
dwelling and neighbourhood characteristics are not significantly biased if they 
are left out.
References
Arend, M. (1991), “Housing Segregation in Switzerland”, in E. D. Huttman 
(ed.), Urban Housing Segregation of Minorities in Western Europe and the United 
States, Duke University Press, Durham and London.
Arend, M., A. Kellerhals Spitz and T. Mächler (1990), «Groupes défavori-
sés sur le marché du logement: Problèmes et mesures», Bulletin du logement 
45, Office fédéral du logement, Bern, Switzerland.
Bajari, P., and M. E. Kahn (2005), “Estimating Housing Demand with an 
Application to Explaining Racial Segregation in Cities”, Journal of Business 
and Economic Statistics, 23(1), pp. 20–33.