Immigration and Provision of Public Goods: Evidence at the Local Level in the US

This paper studies the causal impact of immigration on the provision of local public goods using U.S. county-level data from 1990 to 2010. We uncover substantial heterogeneity across immigrants with different skills, due mainly to their asymmetric impact on the per capita tax base and local revenues. Absent full insurance through intergovernmental transfers, the changes in per capita revenues are reflected in changes in local public service provision: Per capita public expenditures decrease with the arrival of low skilled immigrants, and increase with high-skilled immigrants. While the two types of immigrants offset each other on average, spatial differences in the share of low- and high-skilled immigrants lead to unequal ï¬ scal effects across U.S. counties. We ï¬ nd the estimated impact to differ across various public services, and for second-generation immigrants.