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Working from home and income inequality: risks of a ‘new normal’ with COVID-19

Author

Listed:
  • Luca Bonacini

    (University of Modena and Reggio Emilia)

  • Giovanni Gallo

    (University of Modena and Reggio Emilia
    National Institute for Public Policies Analysis (INAPP))

  • Sergio Scicchitano

    (National Institute for Public Policies Analysis (INAPP)
    Global Labour Organisation (GLO))

Abstract

In the current context of the COVID-19 pandemic, working from home (WFH) became of great importance for a large share of employees since it represents the only option to both continue working and minimise the risk of virus exposure. Uncertainty about the duration of the pandemic and future contagion waves even led companies to view WFH as a ‘new normal’ way of working. Based on influence function regression methods, this paper explores the potential consequences in the labour income distribution related to a long-lasting increase in WFH feasibility among Italian employees. Results show that a positive shift in WFH feasibility would be associated with an increase in average labour income, but this potential benefit would not be equally distributed among employees. Specifically, an increase in the opportunity to WFH would favour male, older, high-educated, and high-paid employees. However, this ‘forced innovation’ would benefit more employees living in provinces have been more affected by the novel coronavirus. WFH thus risks exacerbating pre-existing inequalities in the labour market, especially if it will not be adequately regulated. As a consequence, this study suggests that policies aimed at alleviating inequality, like income support measures (in the short run) and human capital interventions (in the long run), should play a more important compensating role in the future.

Suggested Citation

  • Luca Bonacini & Giovanni Gallo & Sergio Scicchitano, 2021. "Working from home and income inequality: risks of a ‘new normal’ with COVID-19," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(1), pages 303-360, January.
  • Handle: RePEc:spr:jopoec:v:34:y:2021:i:1:d:10.1007_s00148-020-00800-7
    DOI: 10.1007/s00148-020-00800-7
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    Keywords

    COVID-19; Working from home; Inequality; Unconditional quantile regressions;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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