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

Tony Fang (), Emin Gahramanov (), Hui Ming () and Xueli Tang ()
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Tony Fang: Memorial University of Newfoundland
Emin Gahramanov: Department of Economics, American University of Sharjah, Sharjah, United Arab Emirates
Hui Ming: College of Economics, Sichuan Agriculture University, Sichuan, China
Xueli Tang: Faculty of Business and Law, Deakin University, Melbourne, Australia

No 18643, IZA Discussion Papers from IZA Network @ LISER

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.

Keywords: work from home; remote work; wages; productivity; externality (search for similar items in EconPapers)
JEL-codes: D24 E24 J24 (search for similar items in EconPapers)
Date: 2026-05
New Economics Papers: this item is included in nep-hrm
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