No. 1494 - How do immigrants affect local public finances? Evidence from Italian municipalities
The paper analyzes the impact of immigration on public finances in Italy, at the municipal level, between 2008 and 2015. The causal effect is identified through an estimate of the variation in the number of immigrants that is independent of municipalities' initial economic and fiscal conditions. The study also identifies the channels through which immigration affects local public finances.
Our findings show that immigration exerts a positive effect on municipalities' per capita total revenues in Italy, driven by a significant increase in property tax revenues associated with housing rented to immigrants. The results further indicate no effect on total expenditures; however, there is a reallocation between capital and current spending, in favor of the latter.
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13 October 2025
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