Remote Work and Consumer Cities

Abstract

The rapid adoption of remote work led to a sharply reduced presence of office workers in urban centers, weakening cities' traditional role as a center for production. Despite the adverse effect of remote work on cities, we highlight that cities' role as a center for consumption remains strong and may have risen with increased time flexibility from workers. We first use a stylized model to illustrate that the amenity value premium of dense urban centers could serve as a key anchoring force for foot traffic in cities, mitigating the brunt of the negative shock from remote work. Using a combination of foot traffic and consumer transaction data at a detailed geographic level, we show that while visits to former commuting destinations remain depressed due to the persistent popularity of remote work, visits to consumption amenity clusters recovered quickly and robustly, and foot traffic became more spatially concentrated toward amenity clusters in MSAs with a higher level of remote work adoption. Our findings suggest that the adoption of remote work likely accelerated the transition of cities from centers for production to centers for consumption. 

Keywords: Agglomeration, Productivity, Spillover, Amenities, Consumer, Producer, Central City, Suburbs, WFH, Remote Work, Work from Home, Onsite, Commuting, Zoom, Retail

JEL Classification: O33, J24, R12