Walter Steingress: The fiscal impact of immigration in the United States: Evidence at the local level

Moynihan Institute of Global Affairs

Trade, Development and Political Economy

present

Walter Steingress

Principal Researcher, International Studies Division, Bank of Canada

This paper studies the causal impact of immigration to the United States on local government finances using county-level data from 1990 to 2010. The main contribution is to show that an increase in the population share of immigrants of a U.S. county does not significantly affect, on average, local public revenues and expenditures. This finding masks important heterogeneity in terms of the impact of immigrants with different skill levels: Inflows of high-skilled immigrants improve the fiscal health of local governments — by increasing county-level revenues and expenditures — while the arrival of low-skilled immigrants has the opposite  impact. These effects are consistent with a framework in which tax rates do not (fully) adjust to changes in the population, hence per capita tax revenues and public benefits change as a consequence of immigration. One of the main channels of impact on county-level receipts is property tax revenues, which we show to be closely associated with changes in property values in response to immigration. The authors also find that transfers to the county from the federal government (only) partially offset the local fiscal impact of immigration.

Walter Steingress is currently a Principal Researcher in the International Studies Division at the Bank of Canada. His primary interests lie within the field of international economics and international migration. Before joining the Bank of Canada, Walter held an appointment at the Bank of France. He earned his Ph.D. from the University of Montreal and holds a master’s degree from Boston University.

For more information, contact Ryan Monarch, rpmonarc@syr.edu.  For accessibility accommodations, please contact Juanita Horan, jmhoran@syr.edu