The Welfare Consequences of Incoming Remote Workers on Local Residents

This paper explores the impact of an influx of high-skilled remote workers on local residents in destination cities. Dozens of U.S. municipalities have recently implemented Remote Worker Relocation Programs that provide cash incentives to remote workers who relocate to their city. Using Tulsa Remote as a case study-the largest and the earliest such program funded by a non-profit organizationand employing an event study design, I find that the program was effective in attracting remote workers but had offsetting effects on local employment across sectors. The local service sector saw growth, while the wholesale trade sector experienced a decline likely due to local residents' sector switching behavior. To assess the overall and distributional effects of this kind of policy, I build and estimate a structural equilibrium model that takes into account workers' sector choices with a nonemployment option. The program slightly improves the average welfare of local residents primarily due to higher wages and a greater variety of local goods. This compensates for increased rents and prices for local goods. However, nonemployed and low-skilled renters in the tradable sector are adversely affected. Finally, when a Remote Worker Relocation Program is financed by local taxes, the average net benefit of the program is substantially reduced depending on the retention of remote workers.