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Remote Work Intensity and Wages: Evidence from a Representative Canadian Labour Force Survey

Author

Listed:
  • Fang, Tony

    (Memorial University of Newfoundland)

  • Gahramanov, Emin

    (Department of Economics, American University of Sharjah, Sharjah, United Arab Emirates)

  • Ming, Hui

    (College of Economics, Sichuan Agriculture University, Sichuan, China)

  • Tang, Xueli

    (Faculty of Business and Law, Deakin University, Melbourne, Australia)

Abstract

Building on seminal contributions by Bloom et al. (2015) and Davis (2024), we develop a simple theoretical model that captures the trade-off between externalities associated with remote work and those derived from in-office work. The model is based on the premise that both productivity and firm profitability are influenced by the intensity or proportion of remote work arrangements by firms. Ultimately, higher workforce productivity and firm profitability due to remote work translate into higher wages. While remote work can lead to cost savings and positive externalities, excessive adoption may undermine benefits, increase management complexity, and raise the risk of employee shirking. The central theoretical result is an inverted U-shaped relationship between the extent of remote work and wages. To test this prediction, we use data from the Canadian Labour Force Survey to examine the relationship between industry-level remote work intensity and individual wages. The empirical findings reveal that wages rise with remote work intensity up to a threshold, approximately 52.1–63.9%, beyond which they begin to decline, supporting the model’s non-linear prediction.

Suggested Citation

  • Fang, Tony & Gahramanov, Emin & Ming, Hui & Tang, Xueli, 2026. "Remote Work Intensity and Wages: Evidence from a Representative Canadian Labour Force Survey," IZA Discussion Papers 18643, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18643
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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