In this paper, I show that political opposition to immigration can arise even when immigrants bring signi…cant economic prosperity to receiving areas. I exploit exogenous variation in European immigration to US cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s, and instrument immigrants' location decision relying on pre-existing settlement patterns. Immigration increased natives' employment and occupational standing, and fostered industrial production and capital utilization. However, despite these economic bene…ts, it triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower public goods provision. Stitching the economic and the political results together, I provide evidence that natives'backlash was, at least in part, due to cultural di¤erences between immigrants and natives, suggesting that diversity might be economically bene…cial but politically hard to manage.

In this article, I jointly investigate the political and the economic effects of immigration, and study the causes of anti-immigrant sentiments. I exploit exogenous variation in European immigration to U.S. cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s, and instrument immigrants’ location decision relying on pre-existing settlement patterns. I find that immigration triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower redistribution. Exploring the causes of natives’ backlash, I document that immigration increased natives’ employment, spurred industrial production, and did not generate losses even among natives working in highly exposed sectors. These findings suggest that opposition to immigration was unlikely to have economic roots. Instead, I provide evidence that natives’ political discontent was increasing in the cultural differences between immigrants and natives. Results in this article indicate that, even when diversity is economically beneficial, it may nonetheless be socially hard to manage.

Is racial heterogeneity responsible for the distressed …nancial conditions of US central cities and for their limited ability to provide even basic public goods? If so, why? I study these questions in the context of the …rst wave of the Great Migration (1915-1930), when more than 1.5 million African Americans moved from the South to the North of the United States. Black in ‡ows and the induced white out ‡ows ("white ‡ight") are both instrumented for using, respectively, pre-migration settlements and their interaction with MSA geographic characteristics that a¤ect the cost of moving to the suburbs. I …nd that black in-migration imposed a strong, negative …scal externality on receiving places by lowering property values and, mechanically, reducing tax revenues. Unable or unwilling to raise tax rates, cities cut public spending, especially in education, to meet a tighter budget constraint. While the fall in tax revenues was partly o¤set by higher debt, this strategy may, in the long run, have proven unsustainable, contributing to the …nancially distressed conditions of several US central cities today.

How does the arrival of a new minority group affect the social acceptance and outcomes of existing minorities? We study this question in the context of the First Great Migration. Between 1915 and 1930, 1.5 million African Americans moved from the US South to Northern urban centers, which were home to millions of European immigrants arrived in previous decades. We formalize and empirically test the hypothesis that the inflows of Black Americans changed perceptions of outgroup distance among native-born whites, reducing the barriers to the social integration of European immigrants. Predicting Black in-migration with a version of the shift-share instrument, we find that immigrants living in areas that received more Black migrants experienced higher assimilation along a range of outcomes, such as naturalization rates and intermarriages with native-born spouses. Evidence from the historical press and patterns of heterogeneity across immigrant nationalities provide additional support to the role of shifting perceptions of the white majority.

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