How the Rise of Teleworking Will Reshape Labor Markets and Cities

Toshitaka Gokan, Sergey Kichko, Jesse Matheson and Jacques Thisse

No 9952, CESifo Working Paper Series from CESifo

Abstract: Since 2020, London experienced a 400% increase in teleworking among skilled workers. We propose a model that studies the implications of teleworking on (i) the residential structure of cities, (ii) the wage structure between skilled and unskilled workers, and (iii) the provision of local services in central and residential areas. Increased teleworking reduces the willingness to pay for residential proximity to the city center, and thus induces the residential movement of skilled workers towards the suburbs. The magnitude of this structural change, and its effect on labor markets and skilled/unskilled wage inequality, depends on the desirability of local services available in central and residential areas. In a two-city extension, teleworking moves skilled workers from the productive (and expensive) city to the less productive city. This has implications for residential structure and individual welfare in both cities. We find empirical evidence on changes in retail and hospitality footfall, skilled wage premium, and location changes for local services businesses in England consistent with the model’s predictions.

Keywords: telecommuting; working from home; local labor markets; local consumer services; gentrified cities; inter-city commuting (search for similar items in EconPapers)
JEL-codes: J60 R00 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: How the rise of teleworking will reshape labor markets and cities (2024)
Working Paper: How the rise of teleworking will reshape labor markets and cities (2022)
Working Paper: How the rise of teleworking will reshape labor markets and cities? (2022)
Working Paper: How the rise of teleworking will reshape labor markets and cities (2022)
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