Remote Work, Firm Technology, and the Spatial Economy: Generations, Care, and the Normalized Quadratic Approach

Chihiro Shimizu

No e225, Working Papers from Tokyo Center for Economic Research

Abstract: This paper develops a spatial model of remote work, firm technology, and intergenerational care within the Becker-Diewert household-production tradition. The firm's technology is modeled using the Normalized Quadratic cost function, which allows the office-remote labor substitution elasticity to vary with factor prices. Residential space is decomposed into living and home-office components. Childcare and eldercare have separate production functions with own time and market services as substitutes. A generational structure distinguishes children, workers, and the elderly; only workers commute. I derive shadow-price bounds extending Schreyer and Diewert (2014) to five service prices, a spatial full-income identity with care surpluses, and rent gradients that flatten with remote-work technology. Heterogeneous households sort by remote-work capacity and care needs. Population aging amplifies the value of remote work as a care-enabling technology and generates a rent rotation between residential and commercial real estate.

Pages: 69 pages
Date: 2026-03
New Economics Papers: this item is included in nep-age, nep-hre and nep-uep
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