The impact of working from home arrangements on urban sprawl when the firms pay for the "home office"

Following the Covid-19 pandemic, many working from home (WFH) arrangements have been contracted between firms and working households. While firms can save space at the workplace, additional housing surface areas are required for home-based activities. Can these partial transfers of activities from work- to residential places be compatible with urban sprawl containment? In this paper, we use a standard urban economics monocentric model to determine the extent to which urban sprawl containment may be achieved despite WFH, depending on the type of agent that pays for the additional housing costs required for home-based activities. We compare three WFH scenarios with a reference case without WFH: (1) If additional housing costs are entirely paid by households, (2) If such costs are entirely paid by firms, and (3) If they are partially paid by firms (for the share of home-based activities only). We emphasize two main results: first, a better urban sprawl containment is achieved in the case where households pay for the additional housing surface areas required to perform home-based activities, compared to the case where firms partially or totally pay for these additional costs; second, urban sprawl containment may even be better achieved in this scenario compared with the reference case (without WFH arrangements) at a specific double condition that must be fulfilled by the wage rate.