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Remote Work and Compensation Inequality

Author

Listed:
  • De Fraja, Gianni
  • Matheson, Jesse
  • Mizen, Paul
  • Rockey, James
  • Taneja, Shivani
  • Thwaites, Gregory

Abstract

This paper examines how the rise of working-from-home (WFH) affects compensation inequality. Using a novel survey, we find that the option to WFH is highly valued by workers (worth 8% of wages) but concentrated among higher earners, suggesting increased inequality. However, using a simple model where WFH and in-person workers are complements, we show that increased WFH leads to lower wages for WFH workers, potentially offsetting the benefits of WFH. Empirically, workers in WFH-capable occupations experienced 2–7% lower wage growth post-pandemic, consistent with the theory. Overall, we find no change in inequality but a substantial increase in compensation.

Suggested Citation

  • De Fraja, Gianni & Matheson, Jesse & Mizen, Paul & Rockey, James & Taneja, Shivani & Thwaites, Gregory, 2025. "Remote Work and Compensation Inequality," CEPR Discussion Papers 20055, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20055
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    File URL: https://cepr.org/publications/DP20055
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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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