The Shift to Remote Work Lessens Wage-Growth Pressures

Jose Maria Barrero, Nicholas Bloom, Steven Davis, Brent Meyer and Emil Mihaylov ()
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Emil Mihaylov: Federal Reserve Bank of Atlanta

No 15385, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanism in the wage-setting behavior of U.S. employers, and we develop novel survey data to quantify its force. Our data imply a cumulative wage-growth moderation of 2.0 percentage points over two years. This moderation offsets more than half the real-wage catchup effect that Blanchard (2022) highlights in his analysis of near- term inflation pressures. The amenity-values gains associated with the recent rise of remote work also lower labor's share of national income by 1.1 percentage points. In addition, the "unexpected compression" of wages since early 2020 (Autor and Dube, 2022) is partly explained by the same amenity-value effect, which operates differentially across the earnings distribution.

Keywords: inflation dynamics; wage growth; amenity value; remote work; recession risk; business expectations; labor’s share of national income; wage compression (search for similar items in EconPapers)
JEL-codes: D22 E24 E25 E31 J3 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2022-06
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: The shift to remote work lessens wage-growth pressure (2023)
Working Paper: The shift to remote work lessens wage-growth pressure (2023)
Working Paper: The shift to remote work lessens wage-growth pressure (2022)
Working Paper: The Shift to Remote Work Lessens Wage-Growth Pressures (2022)
Working Paper: The Shift to Remote Work Lessens Wage-Growth Pressures (2022)
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