The Zoom City: Working From Home, Urban Productivity and Land Use

Efthymia Kyriakoupoulou () and Pierre Picard
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Efthymia Kyriakoupoulou: Swedish University of Agricultural Sciences

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: Who will benefit and who will lose from a permanent increase in working from home (WFH)? This paper investigates the impact of WFH on cities of different sizes, highlights the dangers of too much WFH, and discusses aspects of the disagreement between workers and firms. Our results suggest that WFH raises urban productivity and average wages only in large cities. We also study the optimal fraction of WFH and show that workers-residents have incentives to adopt an inefficiently high WFH scheme. The implementation of remote work in the short run - at fixed rents and wages - implies higher benefits for long-distance commuters and lower benefits or even losses for short-distance ones. It also implies benefits for some firms and losses for others, which potentially explains the low prevalence of WFH before the pandemic. Finally, we show that advances in digital technology, which increase the productivity of remote workers, lead to increased welfare benefits. A calibration exercise for the average and the largest European capital cities sheds more light on the impact of WFH on cities of different sizes.

Keywords: Working from home; urban structure; commuting; remote work; land use. (search for similar items in EconPapers)
JEL-codes: J81 R12 R14 R21 R49 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (5)

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http://hdl.handle.net/10993/52958 (application/pdf)

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Journal Article: The Zoom city: working from home, urban productivity and land use (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:22-15

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