Working from Home: Too Much of a Good Thing?
52 Pages Posted: 22 Sep 2021
Date Written: January 1, 2021
We develop a general equilibrium model to study how different intensities of telecommuting affect firms’ efficiency and the economy as a whole. We pay attention to the effects of working from home (WFH) that operate through changes in the production and consumption of buildings: more WFH reduces firms’ demands for office space, but increases workers’ demand for space at home. WFH is a mixed blessing: the relationship between telecommuting and GDP is ∩- shaped, and more WFH raises income inequality. Thus, an excessive downscaling of workspaces may be damaging to all. Firms and workers are shown to generally choose inefficiently large WFH shares.
Keywords: alternative work arrangements, housing, land, office, telecommuting, working from home
JEL Classification: J20, R13, R14
Suggested Citation: Suggested Citation