The Effect of Immigration on Local Public Finances

I investigate the relationship between immigration and local public finances, exploiting variation in immigration inflows across local labour markets and data on local government revenues and expenditures. I find that increases in immigration did not result in any change to local government revenues. This is not explained by offsetting decreases in revenues from local sourcs and increases from state-level intergovernmental transfers. Finally, I demonstrate that the lack of impact on revenues similarly implies that immigration does not have an effect on local public expenditures. The findings suggest that immigration does not act as a drain on local public finances.