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Working from Home, Wages, and Regional Inequality in the Light of COVID-19

Author

Listed:
  • Irlacher Michael

    (Department of Economics, JKU Linz, Linz, Austria)

  • Koch Michael

    (Department of Economics and Business Economics, Aarhus University, Aarhus, Denmark)

Abstract

We use the most recent wave of the German Qualifications and Career Survey to reveal a substantial wage premium in a Mincer regression for workers performing their job from home. The premium accounts for more than 10% and persists within narrowly defined jobs as well as after controlling for workplace characteristics. In a next step, we provide evidence on substantial regional variation in the share of jobs that can be done from home in Germany. Our analysis reveals a strong, positive relation between the share of jobs with working from home opportunities and the mean worker income in a district. Assuming that jobs with the opportunity of remote work are more crisis proof, our results suggest that the COVID-19 pandemic might affect poorer regions to a greater extent. Hence, examining regional disparities is central for policy-makers in choosing economic policies to mitigate the consequences of this crisis.

Suggested Citation

  • Irlacher Michael & Koch Michael, 2021. "Working from Home, Wages, and Regional Inequality in the Light of COVID-19," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(3), pages 373-404, June.
    • Handle: RePEc:jns:jbstat:v:241:y:2021:i:3:p:373-404:n:2
    DOI: 10.1515/jbnst-2020-0030
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    Keywords

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    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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