The Impacts of Working from Home on Individual Health and Well-being

Using a novel German linked-employer-employee dataset, we provide unique evidence about the consequences of working from home (WfH) on individual health and well-being. During the recent pandemic, this locational flexibility measure has been used extensively to promote health by hampering the spread of the virus and to secure jobs. However, its direct theoretical ambiguous effects on health and well-being as characterized by different potential channels have barely been empirically investigated to date despite WfH’s increasing popularity in the years before the pandemic. To address concerns about selection into WfH, our analysis relies on an identification strategy ruling out confounding effects by time-invariant unobservable variables. Moreover, we explain the remaining (intertemporal) variation in the individual WfH status by means of an instrumental variable strategy using variation in equipment with mobile devices among establishments. We find that subjective measures of individual health are partly affected by WfH, whereas no corresponding effects are present for an objective measure of individual health. In terms of individual well-being, we find that WfH leads to considerable improvement. By addressing the potential heterogeneity in our effect of interest, we find that men, middle-aged individuals and those commuting to different municipalities particularly benefit from WfH.