The Work-at-Home Technology Boon and its Consequences

Abstract

We study the impact of widespread adoption of work-at-home technology using an equilibrium model where people choose where to live, how to allocate their time between working at home and at the office, and how much space to use in production. A key parameter is the elasticity of substitution between working at home and in the office that we estimate using cross-sectional time-use data. The model indicates that the pandemic induced a large change to the relative productivity of working at home which will permanently affect incomes, income inequality, and city structure.

Keywords: Technology Adoption. Coronavirus. Telecommuting

JEL Classification: O33, O41, R12, R33