Optimal teleworking agreements vs. yearning for normality when vaccine is on the horizon

Jacek Rothert

No 56, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: During a pandemic, companies may adopt teleworking agreements even if they lower current productivity. If managers (or policymakers) want to project an image of ``return to normality'', completely orthogonal to any economic or health outcomes, the scope of teleworking agreements is lower but constant in a stationary equilibrium. In response to the news about upcoming vaccine, rational managers always increase the scope of teleworking agreements, unless the desire to project the image of ``return to normality'' is sufficiently strong, effectively creating a reopening-smoothing motive. The ``return to normality'' may be premature if managers do not understand Lucas' Critique.

Keywords: Covid-19; teleworking; Lucas' Critique; alternative working arrangements (search for similar items in EconPapers)
JEL-codes: I19 M5 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2021
New Economics Papers: this item is included in nep-ppm
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Journal Article: Optimal teleworking agreements vs. yearning for normality when vaccine is on the horizon (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fme:wpaper:56

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