Working from Home, Wages, and Regional Inequality in the Light of COVID-19

33 Pages Posted: 22 Apr 2020

See all articles by Michael Irlacher

Michael Irlacher

Johannes Kepler University

Michael Koch

Aarhus University - Department of Economics and Business Economics

Date Written: 2020

Abstract

We use the most recent wave of the German Qualifications and Career Survey to reveal a substantial wage premium in a Mincer regression for workers performing their job from home. The premium accounts for more than 10% and persists within narrowly defined jobs as well as after controlling for workplace characteristics. In a next step, we provide evidence on substantial regional variation in the share of jobs that can be done from home in Germany. Our analysis reveals a strong, positive relation between the share of jobs with working from home opportunities and the mean worker income in a district. Assuming that jobs with the opportunity of remote work are more crisis proof, our results suggest that the COVID-19 pandemic might affect poorer regions to a greater extent. Hence, examining regional disparities is central for policy-makers in choosing economic policies to mitigate the consequences of this crisis.

Keywords: working from home, COVID-19, regional disparities, home office, BIBB-BAuA

JEL Classification: J310, J220, J610, R100

Suggested Citation

Irlacher, Michael and Koch, Michael, Working from Home, Wages, and Regional Inequality in the Light of COVID-19 (2020). CESifo Working Paper No. 8232, Available at SSRN: https://ssrn.com/abstract=3582329

Michael Irlacher (Contact Author)

Johannes Kepler University ( email )

Linz
Austria

Michael Koch

Aarhus University - Department of Economics and Business Economics ( email )

Fuglesangs Allé 4
Aarhus V, 8210
Denmark

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