The Covid-19 pandemic triggered a huge, sudden uptake in working from home, as individuals and organizations responded to fears of contagion and government restrictions on commercial and social activities. It has become evident that the big shift to work from home will endure after the pandemic ends. No other episode in modern history involves such a pronounced and widespread shift in working arrangements in such a compressed time frame.
These observations prompt some questions: What explains the pandemic’s role as catalyst for a lasting uptake in work from home (WFH)? What does a large, lasting shift to remote work portend for workers? Specifically, how much do they like or dislike WFH? How do preferences in this regard differ between men and women and with the presence of children? How, if at all, do workers and employers act on preferences over working arrangements? When looking across countries and regions, have differences in the pandemic’s severity and the stringency of lockdowns had lasting effects on the amount of WFH?
To tackle these and related questions, we fielded a Global Survey of Working Arrangements in 27 countries. The survey yields individual-level data on demographics, earnings, current WFH levels, employers’ plans, and workers’ desires regarding WFH after the pandemic, perceptions related to WFH, commute times, willingness to pay for the option to WFH, and more.
In a paper prepared for the Brookings Papers on Economic Activity, we study full-time workers aged 20–59 who had finished at least primary school, and investigate how outcomes, plans, desires, and perceptions around WFH vary across individuals and countries.
WFH averages 1.5 days per week in our sample, ranging widely across countries. While employers plan an average of 0.7 WFH days per week after the pandemic, workers want 1.7 days per week. Employees value the option to WFH 2–3 days per week at 5% of pay, on average, with higher valuations for women, people with children, and those with longer commutes. We also find that most employees were favorably surprised by their WFH productivity during the pandemic. Strikingly, when looking across individuals, employer plans for WFH levels after the pandemic rise strongly with unexpected WFH productivity gains during the pandemic. Finally, looking across countries, planned WFH levels rise with the cumulative stringency of government-mandated lockdowns during the pandemic.
The shift to WFH benefits workers for the simple reason that they value the opportunity to WFH part of the week, and some value it a lot. It’s easy to see why: WFH saves on time and money costs of commuting and grooming, offers greater flexibility in time management, and expands personal freedom. Few people could WFH before the pandemic. Many can do so now. Women, people living with children, workers with longer commutes, and highly educated workers tend to put higher values on the opportunity to WFH. Of course, some people dislike remote work and miss the daily interactions with coworkers. Over time, people who feel that way will gravitate to organizations that stick with pre-pandemic working arrangements.
A concern is that younger workers, in particular, will lose out on valuable mentoring, networking, and on-the-job learning opportunities. This concern is a serious one, but we don’t know whether it will materialize. Firms have strong incentives to develop practices that facilitate human capital investments. Workers who value those investment opportunities have strong incentives to seek out firms that provide them. If older and richer workers decamp for suburbs, exurbs, and amenity-rich consumer cities, the resulting fall in urban land rents will make it easier for young workers to live in and benefit from the networking opportunities offered by major cities.
While we have learned a lot about the possible post-pandemic changes in work, we have only scratched the surface of the changes in labor markets set in motion by the pandemic.
© Cevat Giray Aksoy, Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Mathias Dolls, and Pablo Zarate
Cevat Giray Aksoy is associate director of research at the European Bank for Reconstruction and Development and a Research Fellow of IZA.
Jose Maria Barrero is assistant professor of finance at Instituto Tecnológico Autónomo de México.
Nicholas Bloom is the William Eberle Professor of Economics at Stanford University and a Research Fellow of IZA.
Steven J. Davis is a Senior Fellow at the Hoover Insitution and a Research Fellow of IZA.
Mathias Dolls is Deputy Director of the ifo Center for Macroeconomics and Surveys and a Research Fellow of IZA.
Pablo Zarate is a PhD student in economics at Princeton University.
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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.