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BPEA Article

Working from home around the world

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Editor's Note:

The paper summarized here is part of the fall 2022 edition of the Brookings Papers on Economic Activity, the leading conference series and journal in economics for timely, cutting-edge research about real-world policy issues. Research findings are presented in a clear and accessible style to maximize their impact on economic understanding and policymaking. The editors are Brookings Nonresident Senior Fellow and Northwestern University Professor of Economics Janice Eberly and Brookings Nonresident Senior Fellow and Harvard University Professor of Economics James Stock.

See the fall 2022 BPEA event page to watch paper presentations and read summaries of all the papers from this edition. Submit a proposal to present at a future BPEA conference here.

The COVID-19 pandemic triggered a large and lasting shift to working from home among educated workers around the world, finds a new survey presented at the Brookings Papers on Economic Activity (BPEA) conference on September 9.

Steven J. Davis

William H. Abbott Professor of International Business and Economics - The University of Chicago Booth School of Business

“No other episode in modern history involves such a pronounced and widespread shift in working arrangements in such a compressed time frame,” according to Working from Home Around the World, a paper authored by Cevat Giray Aksoy of the European Bank for Reconstruction and Development, Jose Maria Barrero of the Instituto Tecnológico Autónomo de México, Nicholas Bloom of Stanford University, Steven J. Davis of the University of Chicago Booth School of Business, Mathias Dolls of the ifo Institute, and Pablo Zarate of Princeton University.

Workers report that their employers plan an average of 0.7 work-from-home days per week after the pandemic ends. The paper cites several reasons why working from home ultimately will settle at higher levels than suggested by the survey, including separate U.S. data showing a steady rise in work-from-home plans since early 2021 and a surge in patent applications for technologies that support remote work.

The authors’ Global Survey of Working Arrangements went to full-time workers, ages 20-59, who have at least a primary school education. It was fielded online to 37,000 workers across 27 countries in two waves—one in late July and early August 2021, and another in late January and early February 2022.

“This is an area where you should let the market work, and let people and companies find the most suitable arrangements.”

Respondents said they value the option to work from home two or three days a week at 5 percent of pay, on average. People with children younger than 14 place a higher value on the opportunity to work from home—as do women, people with more education, and those with longer commutes. However, even among people with similar demographics and commutes, preferences over whether, and how much, to work from home differ greatly.

BPEA Aksoy Figure 1

These preference differences present employers with important strategic choices, the authors write. By accommodating a range of preferences around working from home, employers can broaden their recruitment pools, reduce turnover, and moderate employee compensation. But, they note, that comes at the cost of greater operational complexity and less in-person communication and collaboration. Returning to five days a week onsite for all employees (as at Tesla) or moving to a remote-first policy (as at Yelp) involve distinct costs and benefits.

The paper cautions against government policies that push employers to offer work from home (as proposed in the Netherlands) and also against policies that make it costlier to work from home (as in Mexico).

“This is an area where you should let the market work, and let people and companies find the most suitable arrangements,” Davis said in an interview with The Brookings Institution. “Prescriptive regulatory approaches are unlikely to satisfy a range of work-from-home preferences in a cost-effective manner.”


Citation

Aksoy, Cevat Giray, Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Mathias Dolls and Pablo Zárate. 2022. “Working From Home Around the World.” BPEA Conference Draft, Fall.

Disclosure

The authors’ Global Survey of Working Arrangements (G-SWA) was supported by the European Bank for Reconstruction and Development, the Asociación Mexicana de Cultura A.C., the Becker Friedman Institute at the University of Chicago, the ifo Institute, and King’s College London. Other than the aforementioned, the authors did not receive financial support from any firm or person for this article or from any firm or person with a financial or political interest in this article. The authors are not currently an officer, director, or board member of any organization with a financial or political interest in this article.

Acknowledgments:

David Skidmore authored the summary language for this paper. Becca Portman assisted with data visualization.

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