Transit design, transportation policy and location-mode choice in the era of telework

This study develops an analytical framework to examine how telework affects commuting mode choice, residential location patterns, and urban transit policy. We incorporate user heterogeneity and multi-modality—transit, driving, and telework—into a monocentric city model, upon which a bi-level transit design problem featuring both utilitarian and egalitarian objectives is formulated. Using the model, we characterize the location-mode joint equilibrium and analyze how transit design and financial levers shape outcomes. Analytical results reveal a distinct sorting pattern: lower-income residents locate closer to the central business district and choose public transit, middle-income residents drive from mid-range suburbs, and higher-income residents opt for telework from the periphery, where spatial mixing occurs due to location indifference among teleworkers. A case study of a Chicago commuter corridor confirms these patterns and shows that the post-pandemic uptick in telework results in uneven welfare gains across income levels. We also find that redesigning transit service—particularly increasing stop spacing to improve operational efficiency—and adopting fare-free transit significantly improve social welfare, especially for low-income commuters. By contrast, taxation or congestion tolls yields limited additional benefits. Taken together, these findings highlight how changes in work behavior interact with residential and travel choices, and underscore the need to rethink related public policies in the era of telework.