## REMOTE WORK’S GROWTH GIFT — Working from home is powering productivity and economic growth

## Source details

**Canonical URL:** [REMOTE WORK’S GROWTH GIFT — Working from home is powering productivity and economic growth](https://www.imf.org/-/media/files/publications/fandd/article/2024/09/bloom.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/fandd/article/2024/09/bloom.pdf.md)
- [Structured JSON version](/-/media/files/publications/fandd/article/2024/09/bloom.pdf.json)

---

### Overview
- Working from home (WFH) increased about tenfold following the outbreak of the pandemic and has settled in at about five times its prepandemic level.
- The shift to WFH could counter slowing productivity and deliver a surge in economic growth over the next few decades, especially if AI yields additional output.
- Analysis framed using Robert Solow’s growth decomposition: growth from factor inputs (labor and capital) and from productivity (total factor productivity).

### Labor: participation and supply effects
- Hybrid work is worth about an 8 percent increase in salary, according to surveys from the United States, Europe, and Asia.
- Typical workers spend about 45 hours a week in the office and close to another 8 hours a week commuting.
- Working from home three days a week saves about five hours a week, about 10 percent of total weekly work and commute time.
- Small increases in the attractiveness of work can bring many millions on the edge of the workforce into employment (those with childcare or eldercare responsibilities, those close to retirement, and some in rural areas).
- Examples:
  - Approximately 2 million more employees with a disability are working in the US following the pandemic; these increases have occurred primarily in high-WFH occupations.
  - Prime-age female employment in the US has risen about 2 percent faster than prime-age male employment since the pandemic.
- Collective labor-supply effects could increase labor supply by several percent.
- Preliminary US survey analysis suggests perhaps 0.3 to 0.5 more desired children per couple when both work from home one day or more a week (potential long-run fertility effects).

### Capital: land use, office space, and transport
- WFH reduces effective demand for office space, enabling reuse for residential and retail purposes.
- In major city centers about half of the land is covered in office space, and office occupancy is now 50 percent below prepandemic levels.
- Releasing office space reduces commuting traffic and the need for additional transportation infrastructure.
- Recent data show traffic is now moving about 2 or 3 miles per hour faster during the morning commute, saving the typical commuter a few minutes a day.
- Allowing partial or full remote work opens up underused land for housing, effectively increasing usable land supply and easing city-center housing affordability.
- Collective capital contributions could raise output a few percent over the coming decades.

### Productivity: micro and macro channels
- Hybrid work (the usual pattern for about 30 percent of the US, European, and Asian labor forces) typically has a roughly flat impact on productivity: commuting/time-savings and quieter environments versus reduced learning, innovation, and communication balance out.
- Fully remote working (adopted by about 10 percent of employees) has highly variable productivity impacts depending on management and task type:
  - Some early-pandemic studies found large negative impacts, possibly due to lockdown chaos.
  - Other studies found large positive impacts in self-directed activities (e.g., call center, data entry) with well-managed firms.
- Macro productivity gains arise from labor-market inclusion and matching:
  - Fully in-person jobs are limited to nearby employees; remote jobs expand the candidate pool—from local to regional to global—improving matches and productivity.
  - Going from 10 to 10,000 qualified candidates allows far more productive matches, especially if AI helps screen applicants.
- WFH has curbed commuting traffic volumes across the US and Europe by an estimated 10 percent, reducing pollution (low-level heavy particulates) that studies link to cognitive and productivity damage; lowering pollution can increase growth.
- Aggregate macro impact of WFH is likely positive due to expanded labor participation and global matching, even if individual-firm micro impacts are neutral.

### Positive feedback loop and technology
- A positive feedback loop exists: more WFH → larger market for remote-work technologies → innovation and adoption → higher productivity → more WFH.
- The share of new patent applications at the US Patent and Trademark Office using terms like “remote work,” “working from home,” or similar was flat until 2020 but has started to rise.
- Improved hardware and software (better cameras, screens), and emerging technologies such as augmented and virtual reality and holograms, will increase the productivity of hybrid and remote work.

### Distributional effects and city centers
- Retail spending in city centers has fallen but relocated to suburbs; overall consumption has resumed its prepandemic trend.
- Large reductions in commercial office valuations represent investor losses but free up space for residential conversion, potentially making downtown living more affordable for middle- and lower-income essential workers (firefighting, policing, teaching, health care, food, transportation).
- Overall assessment: winners massively outweigh losers—firms, employees, and society have reaped large benefits from WFH.

### Key statistics and figures (verbatim)
- WFH increased about tenfold following the outbreak of the pandemic and has settled in at about five times its prepandemic level.
- Hybrid work is worth about an 8 percent increase in salary.
- Typical workers: about 45 hours a week in the office and close to another 8 hours a week commuting.
- Working from home three days a week saves about five hours a week, about 10 percent of total weekly work and commute time.
- Approximately 2 million more employees with a disability are working in the US following the pandemic.
- Prime-age female employment has risen about 2 percent faster than prime-age male employment since the pandemic.
- Preliminary analysis suggests perhaps 0.3 to 0.5 more desired children per couple when both work from home one day or more a week.
- In major city centers about half of the land is covered in office space.
- Office occupancy is now 50 percent below prepandemic levels.
- Traffic is now moving about 2 or 3 miles per hour faster during the morning commute.
- Hybrid work covers about 30 percent of the US, European, and Asian labor forces.
- Fully remote working has been adopted by about 10 percent of employees.
- Commuting traffic volumes reduced by an estimated 10 percent.

*Nicholas Bloom — “Remote Work’s Growth Gift,” F&D, SEPTEMBER 2024.*

---


_Source: https://www.imf.org/-/media/files/publications/fandd/article/2024/09/bloom.pdf_