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Work from home, labour market participation and employment

Author

Listed:
  • Riccardo Crescenzi

    (London School of Economics)

  • Davide Dottori

    (Bank of Italy)

  • Davide Rigo

    (London School of Economics)

Abstract

We examine how the pandemic-driven rise in work from home (WFH) has affected labour market participation and employment in Italy. Leveraging a unique administrative dataset covering the population of remote workers, we find that WFH has had a positive effect on both activity and employment rates at the local labour market (LLM) level. To address endogeneity concerns, we instrument the observed increase in WFH with its potential, derived from LLM sectoral compositions. Controlling for several demographic and economic factors that could affect the distribution of WFH potential, we find no evidence of pre-trends. We also explore the mechanisms driving our results. The impact is stronger in response to the increase in WFH among women of child-rearing age and in areas with limited childcare services. We also find that the effect is more pronounced in the South and in less densely populated areas. These findings suggest that WFH can play a role in terms of labour market inclusion.

Suggested Citation

  • Riccardo Crescenzi & Davide Dottori & Davide Rigo, 2025. "Work from home, labour market participation and employment," Questioni di Economia e Finanza (Occasional Papers) 958, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_958_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0958/QEF_958.pdf
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    References listed on IDEAS

    as
    1. Marta Angelici & Paola Profeta, 2024. "Smart Working: Work Flexibility Without Constraints," Management Science, INFORMS, vol. 70(3), pages 1680-1705, March.
    2. Althoff, Lukas & Eckert, Fabian & Ganapati, Sharat & Walsh, Conor, 2022. "The Geography of Remote Work," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    3. Alipour, Jean-Victor & Fadinger, Harald & Schymik, Jan, 2021. "My home is my castle – The benefits of working from home during a pandemic crisis," Journal of Public Economics, Elsevier, vol. 196(C).
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    Cited by:

    1. Gaetano Basso & Davide Dottori & Sara Formai, 2025. "Working from home and labour productivity: firm-level evidence," Temi di discussione (Economic working papers) 1508, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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