Spatial Implications of Telecommuting

48 Pages Posted: 29 Jan 2021 Last revised: 16 Apr 2021

See all articles by Matt Delventhal

Matt Delventhal

Claremont McKenna College - Robert Day School of Economics and Finance

Andrii Parkhomenko

University of Southern California - Marshall School of Business

Date Written: December 9, 2020

Abstract

If the 2020 surge in working from home became permanent, how would the distribution of jobs and residents within and across U.S. cities change? To study this question, we build a quantitative spatial equilibrium model of job and residence choice with commuting frictions between 4,502 sub-metropolitan locations in the contiguous U.S. A novel feature of our model is the heterogeneity of workers in the fraction of time they work on-site: some workers commute daily, some always work at home, while others alternate between working on-site and remotely. In a counterfactual where remote work becomes more common, residents move from central to peripheral areas within cities, and from large coastal to small interior cities, on average. The reallocation of jobs is less monotonic, with increases both in peripheral locations and in the highest-productivity metropolises. Agglomeration externalities from in-person interactions are crucial for welfare effects. If telecommuters keep contributing to productivity as if they worked on-site, better job market access drives considerable welfare gains, even for those who continue to commute. But if productivity declines in response to the reduction in face-to-face interactions, wages fall and most workers are worse off.

Keywords: COVID-19, urban, work at home, commuting, spatial equilibrium

JEL Classification: E24, J81, R31, R33, R41

Suggested Citation

Delventhal, Matt and Parkhomenko, Andrii, Spatial Implications of Telecommuting (December 9, 2020). Available at SSRN: https://ssrn.com/abstract=3746555 or http://dx.doi.org/10.2139/ssrn.3746555

Matt Delventhal

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

Andrii Parkhomenko (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd, HOH 431
Los Angeles, CA California 90089-1424
United States

HOME PAGE: http://www.andrii-parkhomenko.net/

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