Brain Drained by Working from Home

Abstract

This paper uses unique mobile phone data to measure working from home (WFH) and examine its impact on innovation in China. Treating the Coronavirus Disease 2019 pandemic as an exogenous shock, we find that a 10%  (63 minutes) increase in daily time spent at home would lead to a 0.618%  (approximately 0.14 patents) decrease in patent applications per hundred workers per year. The negative impact of WFH diminishes with the decrease in the novelty and complexity of innovative activities and with the clustering of high-tech service firms. These findings are mainly attributed to the hindrance of face-to-face interactions when WFH is applied, while online communication cannot perfectly substitute for face-to-face interactions. Also, unsupervised disruptions when working at home contribute to a negative impact on innovation.

Keywords: Work from home, Innovation Outputs, Brain Drained, China