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Working from home: Too much of a good thing?

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  • Thisse, Jacques-François
  • Behrens, Kristian
  • Kichko, Sergey

Abstract

We develop a general equilibrium model with three primary production factors---land, skilled, and unskilled labor---and three sectors---construction, intermediate inputs, and final consumption---to study how different intensities of telecommuting affect the efficiency of firms that embrace home working, as well as its impact on the whole economy. In doing so, we pay particular attention to the effects of increasing working from home (WFH) that go through changes in the production and consumption of buildings: more WFH reduces firms' demands for office space, but increases workers' demand for living space since additional room is required to work from home. We find that more WFH is a mixed blessing: the relationship between telecommuting and productivity or GDP is ∩-shaped, whereas telecommuting raises income inequality. Hence, WFH is not a panacea since an excessive downscaling of workspaces may be damaging to all and exacerbate economic inequality.

Suggested Citation

  • Thisse, Jacques-François & Behrens, Kristian & Kichko, Sergey, 2021. "Working from home: Too much of a good thing?," CEPR Discussion Papers 15669, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:15669
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    More about this item

    Keywords

    Working from home; Alternative work arrangements; Telecommuting; Housing; Office; Land;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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