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

Sérgio Rebelo
João Guerreiro
Publication Year 
JEL Code 
H00 - General
J61 - Geographic Labor Mobility; Immigrant Workers
R3 - Production Analysis and Firm Location
R58 - Regional Development Policy
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.
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