Working from Home: Too Much of a Good Thing?
Too much working from home reduces the performance of the overall economy because the productivity is negatively affected by over-exploitation of ICT and by the absence of face-to-face contacts. The authors recommend working from home 20%–40% of the time on average.
Key Issue
Since the 1980s, firms have experienced new organizations of labor in which the flexibility of “where the work can be done” is a major feature. The trend toward working from home (WFH)—defined as work tasks performed from home or satellite offices—has accelerated since the start of the Covid-19 pandemic. While no more than 5% of the labor force regularly worked home in the US and in the EU before the pandemic, these numbers have jumped since March 2020: WFH has arrived on a grand scale. One might thus wonder what economic impacts it may bring about.
Approach and Methodology
We analyze the wider economic impacts of large-scale telecommuting by studying a model where three primary production factors—skilled workers, unskilled workers, and land—and three sectors—construction, intermediate inputs, and final consumption—interact to shape the economy. We study how different intensities of WFH affect both GDP (efficiency) and the wage structure (equity) by paying particular attention to: (i) the reduction of commuting to the workplace in cities; (ii) the change in productivity brought about by the concentration of employment within offices and city centers; and (iii) the shifts in demand for larger residences and less office space, which trigger changes that percolate through housing and land markets.
Key Findings and Conclusions
We analyze the wider economic impacts of large-scale telecommuting by studying a model where three primary production factors—skilled workers, unskilled workers, and land—and three sectors—construction, intermediate inputs, and final consumption—interact to shape the economy. We study how different intensities of WFH affect both GDP (efficiency) and the wage structure (equity) by paying particular attention to: (i) the reduction of commuting to the workplace in cities; (ii) the change in productivity brought about by the concentration of employment within offices and city centers; and (iii) the shifts in demand for larger residences and less office space, which trigger changes that percolate through housing and land markets.
Authors
Publication
Working from Home: Too Much of a Good Thing?
CESifo, Munich, 2021
CESifo Working Paper No. 8831