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Remote Work and Compensation Inequality

Author

Listed:
  • Gianni De Fraja

    (School of Economics, University of Nottingham, Nottingham NG8 1BB, UK)

  • Jesse Matheson

    (School of Economics, University of Sheffield, Sheffield S1 4DT, UK)

  • Paul Mizen

    (King’s College London, London WC2R 2LS, UK)

  • James Rockey

    (Department of Economics, University of Birmingham, Birmingham B15 2TY, UK)

  • Shivani Taneja

    (Department of Economics, University of Kent, Canterbury CT2 7NZ, UK)

  • Gregory Thwaites

    (School of Economics, University of Nottingham, Nottingham NG8 1BB, UK)

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.

Suggested Citation

  • Gianni De Fraja & Jesse Matheson & Paul Mizen & James Rockey & Shivani Taneja & Gregory Thwaites, 2024. "Remote Work and Compensation Inequality," Working Papers 2024008, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2024008
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    File URL: https://www.sheffield.ac.uk/economics/research/serps
    File Function: First version, October 2024
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    More about this item

    Keywords

    Remote working; Work-from-home; Inequality; Compensation; Pandemic; Perks;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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