Remote Work and Compensation Inequality

Gianni De Fraja, Jesse Matheson, Paul Mizen, James Rockey, Shivani Taneja and Gregory Thwaites

No 20055, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines how the rise of working-from-home (WFH) affects compensation inequality. Using a novel survey, we find that the option to WFH is highly valued by workers (worth 8% of wages) but concentrated among higher earners, suggesting increased inequality. However, using a simple model where WFH and in-person workers are complements, we show that increased WFH leads to lower wages for WFH workers, potentially offsetting the benefits of WFH. Empirically, workers in WFH-capable occupations experienced 2–7% lower wage growth post-pandemic, consistent with the theory. Overall, we find no change in inequality but a substantial increase in compensation.

Keywords: Remote working; Work-from-home; Inequality; Compensation; Pandemic (search for similar items in EconPapers)
JEL-codes: H12 J01 R12 (search for similar items in EconPapers)
Date: 2025-03
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