Research Details

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.

Type

Working Paper

Author(s)

Sergio Rebelo, Joao Guerreiro, Pedro Teles

Date Published

2023

Citations

Rebelo, Sergio, Joao Guerreiro, and Pedro Teles. 2023. Remote Work, Foreign Residents, and the Future of Global Cities.