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Citation
De Fraja, Gianni and Matheson, Jesse and Mizen, Paul and Rockey, James Charles, Taneja, Shivani, Gregory Thwaites, “Remote Work and Compensation Inequality. CEPR Decision Paper 54290, September 2024
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.