Working from home: the post-COVID 19 implications

Working from home is here to stay

Barrero et al., for this paper, construct their own cross-sectional survey: they have run the survey about once a month since May 2020, collecting over 30,000 responses from working-age Americans to questions such as what are their personal experiences with working from home (WFH), what are their preferences and plans about the extent of WFH after the pandemic ends, and much more. Barrero et al.’s  survey data track the incidence of working from home and provide insights into how a persistent shift to WFH will affect worker well-being, productivity, commuting time, spending near business premises, and sales tax revenues in large cities. Finally, they supplemented their analysis of the survey data, with feedback from informal conversations with dozens of U.S. business executives. Their conclusions:

• Employees will enjoy large benefits from greater remote work, especially those with higher earnings;
• The shift to WFH will directly reduce spending in major city centers by at least 5-10 percent relative to the pre-pandemic situation;
• The data on employer plans and the relative productivity of WFH imply a 5 percent productivity boost in the post-pandemic economy due to re-optimized working arrangements;
• Only one-fifth of this productivity gain will show up in conventional productivity measures, because they do not capture the time savings from less commuting.

Why Working From Home Will Stick
Authors: Jose Maria Barrero, Nicholas Bloom, Steven J. Davis
From: Instituto Tecnológico Autónomo de México, Stanford University, University of Chicago

A closer look at the productivity gains

In this paper, Davis et al., use a model where high-skill workers can freely allocate their time to working from home or in the office. The model details the key tradeoffs to working from home: There is no commute, saving time, but productivity of working from home may be lower than at the office. All workers choose where to live, how much to consume, and how much housing to rent. Their model implies that the widespread adoption of WFH technology increased the productivity of working at home relative to the productivity of working in the office by 34% between the onset and the end of the pandemic. In addition, their model suggests the COVID pandemic will lead to higher lifetime income for the working population because it forced many households to work at home which, through learning and adoption effects, boosted WFH productivity. While the measured gains to productivity we report of working at home likely would have happened eventually, the pandemic accelerated this process.
The Work-from-Home Technology Boon and its Consequences
Authors: Morris Davis, Andra Ghent, Jesse Gregory
From: Rutgers University, University of North Carolina, Chapel Hill, University of Wisconsin-Madison