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Working from Home, Wages, and Regional Inequality in the Light of Covid-19

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  • Michael Irlacher
  • Michael Koch

Abstract

We use the most recent wave of the German Qualifications and Career Survey to reveal a substantial wage premium in a Mincer regression for workers performing their job from home. The premium accounts for more than 10% and persists within narrowly defined jobs as well as after controlling for workplace characteristics. In a next step, we provide evidence on substantial regional variation in the share of jobs that can be done from home in Germany. Our analysis reveals a strong, positive relation between the share of jobs with working from home opportunities and the mean worker income in a district. Assuming that jobs with the opportunity of remote work are more crisis proof, our results suggest that the COVID-19 pandemic might affect poorer regions to a greater extent. Hence, examining regional disparities is central for policy-makers in choosing economic policies to mitigate the consequences of this crisis.

Suggested Citation

  • Michael Irlacher & Michael Koch, 2020. "Working from Home, Wages, and Regional Inequality in the Light of Covid-19," CESifo Working Paper Series 8232, CESifo.
    • Handle: RePEc:ces:ceswps:_8232
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    References listed on IDEAS

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    1. Sascha O. Becker & Marc-Andreas Muendler, 2015. "Trade and tasks: an exploration over three decades in Germany," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 30(84), pages 589-641.
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    Cited by:

    1. Jieun Lee, 2022. "Moral Hazard on Productivity Among Work-From-Home Workers Amid the COVID-19 Pandemic," Papers 2209.05684, arXiv.org.
    2. Alexandru Bănică & Ionel Muntele, 2023. "Local and regional factors of spatial differentiation of the excess mortality related to the COVID-19 pandemic in Romania," Letters in Spatial and Resource Sciences, Springer, vol. 16(1), pages 1-21, December.
    3. Marouani, Mohamed Ali & Minh, Phuong Le, 2020. "The first victims of Covid-19 in developing countries? The most vulnerable workers to the lockdown of the Tunisian economy," GLO Discussion Paper Series 581, Global Labor Organization (GLO).
    4. Juan Cruz Varvello & Jorge Camusso & Ana Inés Navarro, 2022. "Teletrabajo y distribución de ingresos laborales en Argentina," Asociación Argentina de Economía Política: Working Papers 4605, Asociación Argentina de Economía Política.
    5. Wu, Hongyue & Chang, Yuan & Chen, Yunfeng, 2024. "Greenhouse gas emissions under work from home vs. office: An activity-based individual-level accounting model," Applied Energy, Elsevier, vol. 353(PB).
    6. Palomino, Juan C. & Rodríguez, Juan G. & Sebastian, Raquel, 2020. "Wage inequality and poverty effects of lockdown and social distancing in Europe," European Economic Review, Elsevier, vol. 129(C).
    7. Jan Fransen & Daniela Ochoa Peralta & Francesca Vanelli & Jurian Edelenbos & Beatriz Calzada Olvera, 2022. "The emergence of Urban Community Resilience Initiatives During the COVID-19 Pandemic: An International Exploratory Study," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(1), pages 432-454, February.
    8. Stefanie Stantcheva, 2022. "Inequalities in the times of a pandemic," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(109), pages 5-41.
    9. Magnus Moglia & Stephen Glackin & John L. Hopkins, 2022. "The Working-from-Home Natural Experiment in Sydney, Australia: A Theory of Planned Behaviour Perspective," Sustainability, MDPI, vol. 14(21), pages 1-21, October.
    10. Diego Rodríguez Rodríguez, 2020. "Teletrabajo, acceso a Internet y apoyo a la digitalización en el contexto del Covid-19," Fedea Economy Notes 2020-08, FEDEA.
    11. Pouliakas, Konstantinos, 2020. "Working at Home in Greece: Unexplored Potential at Times of Social Distancing?," IZA Discussion Papers 13408, Institute of Labor Economics (IZA).
    12. Wei Wan & Jue Wang & Weimin Jiang, 2023. "Does COVID-19 Exacerbate Regional Income Inequality? Evidence from 20 Provinces of China," Sustainability, MDPI, vol. 15(15), pages 1-16, August.
    13. Vogtenhuber, Stefan & Steiber, Nadia & Mühlböck, Monika, 2023. "Got used to make less: the lasting earnings losses of COVID-19 short-time work," SocArXiv p2qvh, Center for Open Science.
    14. Kosteas, Vasilios D. & Renna, Francesco & Scicchitano, Sergio, 2022. "Covid-19 and Working from Home: toward a "new normal"?," GLO Discussion Paper Series 1013, Global Labor Organization (GLO).
    15. Astorquiza-Bustos, Bilver Adrian & Quintero-Peña, Jose Wilmar, 2023. "Who can work from home? A remote working index for an emerging economy," Telecommunications Policy, Elsevier, vol. 47(10).
    16. Bárcena-Martín, Elena & Molina, Julián & Muñoz-Fernández, Ana & Pérez-Moreno, Salvador, 2022. "Vulnerability and COVID-19 infection rates: A changing relationship during the first year of the pandemic," Economics & Human Biology, Elsevier, vol. 47(C).
    17. Cho, Seung Jin & Lee, Jun Yeong & Winters, John V., 2020. "COVID-19 Employment Status Impacts on Food Sector Workers," ISU General Staff Papers 202006080700001107, Iowa State University, Department of Economics.
    18. Wang, Ding & Tayarani, Mohammad & Yueshuai He, Brian & Gao, Jingqin & Chow, Joseph Y.J. & Oliver Gao, H. & Ozbay, Kaan, 2021. "Mobility in post-pandemic economic reopening under social distancing guidelines: Congestion, emissions, and contact exposure in public transit," Transportation Research Part A: Policy and Practice, Elsevier, vol. 153(C), pages 151-170.
    19. Svenn-Erik Mamelund & Jessica Dimka & Nan Zou Bakkeli, 2021. "Social Disparities in Adopting Non-pharmaceutical Interventions During COVID-19 in Norway," Journal of Developing Societies, , vol. 37(3), pages 302-328, September.
    20. Egana-delSol, Pablo & Micco, Alejandro, 2024. "The Role of Technological Change in the Evolution of the Employment to Output Elasticity," IZA Discussion Papers 17003, Institute of Labor Economics (IZA).
    21. Ben Yahmed, Sarra & Berlingieri, Francesco & Brüll, Eduard, 2022. "Adjustments of local labour markets to the COVID-19 crisis: The role of digitalisation and working-from-home," ZEW Discussion Papers 22-031, ZEW - Leibniz Centre for European Economic Research.
    22. Fadinger, Harald & Schymik, Jan & Alipour, Jean-Victor, 2020. "My Home Is My Castle -- The Benefits of Working from Home During a Pandemic Crisis: Evidence from Germany," CEPR Discussion Papers 14871, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    working from home; COVID-19; regional disparities; home office; BIBB-BAuA;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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