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Remote Work, Foreign Residents, and the Future of Global Cities

Author

Listed:
  • Pedro Teles
  • João Guerreiro

Abstract

As remote work opportunities expand, more people are seeking residence in foreign destinations. The resulting surge in foreign residents generates capital gains for property owners but negatively impacts renters and creates potentially important production, congestion, and amenities externalities. We study the optimal policy toward foreign residents in a model with key features emphasized in policy discussions. Using this model, we provide sufficient statistics to evaluate the impact of an influx of foreign residents and to calculate the tax/transfer policies required to implement the optimal policy. This policy involves implementing transfers to internalize agglomeration, congestion, and other potential externalities. Importantly, we find that it is not optimal to restrict, tax, or subsidize home purchases by foreign residents.

Suggested Citation

  • Pedro Teles & João Guerreiro, 2023. "Remote Work, Foreign Residents, and the Future of Global Cities," Working Papers w202310, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w202310
    as

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    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp202310.pdf
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    References listed on IDEAS

    as
    1. Rebecca Diamond, 2016. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000," American Economic Review, American Economic Association, vol. 106(3), pages 479-524, March.
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    More about this item

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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