Tuesday, February 26, 2013

Back to Work

Traffic congestion in LA is nasty.  In West LA, many people have nice homes that they have configured into their own pleasure palaces.   The road traffic and the nice homes have nudged many people to work at home.   Many LA workers have their own firms and the firm is based in their house.

But, what about workers who work for "real" companies?  In this age of the Internet, wouldn't you expect that many of them would want to telecommute?  There could be gains to trade between the firm and worker as both might want the worker to telecommute.  If such workers can be motivated to avoid shirking then the firm needs less real estate and the workers can be paid less (because they aren't losing time to commuting).

But,  today  Yahoo has announced that workers must come back to work.  This is another data point for Glaeser's 1990s vision that information technology would increase the demand for face to face communication and hence strengthen cities (i.e the corporate headquarters).   Nick Bloom et. al. have run a field experiment in China documenting the productivity gains for a call center that allowed workers to telecommute.

What this literature needs is to investigate the productivity effects of working from home for different types of jobs.  If higher wage workers have a higher value of time, then they should prefer working at home more.  Conversely, it is possible that higher wage workers already live closer to their jobs because they value their time more and can afford more expensive housing.  This raises the question of how workers jointly choose their place of work and place of residence. If they knew they could unbundle the two because they could work from home, would they have lived in a very different neighborhood and home?

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