In 1976 only 21 of the 50 largest American cities did not have residence requirements imposed by municipal charter, ordinance, administrative regulations, or State law. Proponents of these laws argue that they ensure personnel availability in emergencies, add to the tax base, and provide jobs for low-skilled city residents. Opponents argue that they restrict the freedom of municipal workers, lead potential workers to quit the municipal labor pool, and require higher wages. Contrary to the conclusion of conventional economic analysis, however, employers support residency restrictions and employees oppose them. A logit analysis of the factors affecting the existence of a residency law shows that a residence requirement appears to increase the supply of labor rather than decrease it and increase the demand for labor rather than decrease it. Overall, the estimated effect is an increase of 5 percent in the employment of municipal police together with a decrease of 13 percent in total compensation. Thus, the city appears to receive an increase in employment with no increase in expenditures. Tables and 22 references.