The Aggregate Impact of Working from Home

Work from home (WFH) has surged in America, rising from 5% of workdays in 2019, peaking at about 60% in May 2020 during the lockdown, to stabilize at about 27% by May 2023. This five-fold increase in working from home, including both full time remote and part time telework, has been possibly the largest change to US labor markets since World War II. This WFH surge has generated major economic and policy questions over the impact of this on many areas of the US economy. This project will investigate the impact of this WFH surge on the aggregate US economy and labor market, arising from the impacts on productivity (which could be positive or negative), and on labor force participation. These questions are important academically, for monetary and fiscal policymakers, for businesses and managers, and for investors planning for the impact of WFH on goods and labor markets.

This project has three major strands to advance research on this topic. First is the Survey of Working Arrangements and Attitudes (SWAA) which will collect detailed WFH information for around 8,000 working Americans a month aged 20 to 64 on current practices, intentions and impacts on lifestyle, productivity and living arrangements. This provides detailed monthly data on exactly the working patterns across regions, industries and occupations across the US. Second, the project will also develop an employee-employer dataset from a leading US payroll processing firm to examine where people live and work pre and post pandemic. Payroll data usually has accurate home and work location data, and by examining a panel of employees and individuals it is possible to examine impacts of WFH on locational choice and infer WFH patterns. Third, the team will examine the impact of working from home on aggregate US productivity and worker welfare using a general equilibrium model. This aim will provide results on individual workers? relative productivity while working from home and then enable counterfactual exercises to see how economy-wide welfare and productivity would differ if, for example, we forced working from home back to the low levels from before the pandemic. This will be invaluable for considering some of the larger, long-run aggregate impacts of the roughly 5-fold increase in rates of working from home experienced post-pandemic.