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The Power of Proximity to Coworkers

Author

Listed:
  • Natalia Emanuel
  • Emma Harrington
  • Amanda Pallais

Abstract

How does proximity to coworkers affect training and productivity? We study software engineers at a Fortune 500 firm from 2019 to 2024. We leverage two shocks to colocation: (i) the office closures in 2020 and (ii) the subsequent return-to-office mandates. In both cases, co-located teams experienced bigger changes in proximity than distributed ones, facilitating difference-in-differences designs. We find that sitting near teammates increases coding feedback by 18.3% and improves code quality. Gains are concentrated among less-tenured and younger employees, who are building human capital. However, there is a tradeoff: experienced engineers write less code when sitting near colleagues. In national US data, we find suggestive evidence that the rise of remote work has had scarring effects on young college graduates: in remotable jobs, their unemployment rate has remained elevated relative to older graduates', a pattern not seen in non-remotable jobs.

Suggested Citation

  • Natalia Emanuel & Emma Harrington & Amanda Pallais, 2025. "The Power of Proximity to Coworkers," RFBerlin Discussion Paper Series 25164, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:25164
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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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