Working from Home: Too Much of a Good Thing?

48 Pages Posted: 20 Jan 2021

See all articles by Kristian Behrens

Kristian Behrens

University of Quebec at Montreal (UQAM) - Department of Economics

Sergey Kichko

National Research University Higher School of Economics

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: 2021

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.

JEL Classification: J200, R130, R140

Suggested Citation

Behrens, Kristian and Kichko, Sergey and Thisse, Jacques-François, Working from Home: Too Much of a Good Thing? (2021). Available at SSRN: https://ssrn.com/abstract=3768910 or http://dx.doi.org/10.2139/ssrn.3768910

Kristian Behrens (Contact Author)

University of Quebec at Montreal (UQAM) - Department of Economics ( email )

P.O. Box 8888, Downtown Station
Montreal, Quebec H3C 3P8
Canada

Sergey Kichko

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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