In this project, we analyse the quantitative effects of the migration wave between 2003 and 2010 on English local authority spending, with a focus on expenditure items linked to redistribution.

We apply a shift-share estimation strategy based on historical settlements and find preliminary evidence that immigration had a marginal impact on local authority funding sources and a negative effect on total service provision per capita. Zooming into the different expenditure items, we find that local authorities experiencing relatively larger migration inflows did not see changes in their expenditure mix but rather saw spending declines in both social care and education services per capita. Potential mechanisms we identify are natives’ flight and changes in the preferences of the local authorities’ population.

In an extension, we find no preliminary evidence that post-2004 EU migration drives these effects. This group indeed had distinct migration patterns and socio-economic characteristics from other migrants. Applying a difference-in-difference strategy, we find that large inflows from this group of migrants also caused reductions in social care expenditure per capita. However, we find distinct patterns in election outcomes and the spending mix of local authorities suggesting changes induced by this particular group were rather driven by changes in the local authorities’ demographic characteristics followed by an institutional reaction."