SS8: Working from home and the new geography of workers, firms and innovation

SPECIAL SESSIONS

Name and affiliations of the session organisers

Riccardo Crescenzi (LSE)
Max Nathan (UCL)
Davide Rigo (LSE)

Description

From the early days of the COVID-19 crisis, through the resulting lockdowns and into the present, working from home (WFH, or remote / hybrid working) has been a necessary practice for many firms and workers. The last few years have thus significantly accelerated the spread of WFH across occupations, industries and places, whether measured by firm and worker surveys (Haskel 2021), tracking job ads (Hansen et al. 2023) or leveraging administrative data (Crescenzi et al. 2022). In parallel, a rapidly growing body of research is exploring the impacts of WFH on a range of worker, firm and urban-level outcomes (e.g. Choudhury et al. 2020, Bloom et al. 2022, Monte et al. 2022).

However, we still have a thin understanding of the effects of remote working on the geography of workers, firms and innovation. Since Marshall, knowledge spillovers, alongside labour and supplier pooling, are considered key drivers for the clustering of firms and workers. The WFH transition alters firms’ and workers’ incentives for colocation (Baldwin and Forslid 2020) which may feed through to agglomeration economies and geographies of innovation. The resulting reorganisation of work may push companies and their employees to relocate away from congested and expensive cities (Nathan and Overman 2020; Ramani and Bloom 2021; Bergeaud et al. 2023). We are interested in studies documenting structural changes in agglomeration economies, as well as the impact of WFH on local economic development and the rebalancing of regional disparities. While core regions and urban areas may potentially lose the collective benefits of inter-firm and workers ‘buzz’ (Duranton and Puga 2020), second-tier cities and rural areas may gain momentum thanks to their cost advantage and amenities appeal to teleworkers.

Furthermore, the consensus in the literature is that knowledge flows are highly dependent on face-to-face interactions (Storper and Venables 2004). Here, the effects of the WFH transition on innovation remain unclear. From one perspective, it is bad for innovation: it reduces in-person interactions and thus the generation of new ideas (Atkin et al. 2022), especially if online communication only offers a thin form of ‘being there’ (Ayyangar 2021). Evidence from firms under COVID finds some support for this (Bao et al. 2021, Gibbs et al. 2021). Longer term, such a shift would also reduce clusters’ and cities’ dominant role in innovative activity. From another perspective, though, online communications platforms may be ‘good enough’ to support at least some innovative activity (Grabher and Ibert 2014). Hybrid working may also increase effective labour market size, bringing together larger pools of potential collaborators / ideas (Clancy 2021). The pre-pandemic growth of international teams and research provides some support for this, as does suggestions of a long-term declining urban innovation premium (Packalen and Bhattacharya 2015). Such a shift might partially de-urbanise invention, leading to more even geographies of innovative activity.

We welcome contributions to the above, including on these questions:

How can we robustly track the spread of WFH in research / knowledge-intensive occupations and industries?
How, and how far, do online platforms / tools for virtual work complement or substitute for in-person interaction?
What are the effects of WFH on the quantity and quality of innovation, either at firm level or urban level?
What are the effects of WFH on firms’ performance and the organisation of their activities in space, both across cities and across countries?
What are the fundamental and permanent effects of WFH on agglomeration economies (labour markets and knowledge spillovers)?
Does the WFH revolution favour certain types of places over others? Does WFH make all places more equal in terms of development opportunities? Which are the factors that may reinforce or mitigate the effect of WFH on current regional inequalities?

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References

Bergeaud, A., Eyméoud, J. B., Garcia, T., and Henricot, D. (2023). Working From Home and Corporate Real Estate. Regional Science and Urban Economics, 99, 103878.

Bloom, N., R. Han and J. Liang (2022). How Hybrid Working From Home Works Out. National Bureau of Economic Research Working Paper Series No. 30292.

Choudhury, P., C. Foroughi and B. Z. Larson (2020). Work-from-Anywhere: The Productivity Effects of Geographic Flexibility. Academy of Management Proceedings, 2020(1): 21199.

Crescenzi, R., Giua, M. and Rigo (2021). How Many Jobs Can Be Done at Home? Not So Many! LSE Geography and Environment Discussion Paper Series, No. 37.

Gibbs, M., Mengel, F. and Siemroth, C. (2023). Work from Home and Productivity: Evidence from Personnel and Analytics Data on Information Technology Professionals. Journal of Political Economy Microeconomics, 1(1), 7-41.

Hansen, S., P. J. Lambert, N. Bloom, S. J. Davis, R. Sadun and B. Taska (2023). Remote Work across Jobs, Companies, and Space. National Bureau of Economic Research Working Paper Series No. 31007.

Monte, F., C. Porcher and E. Rossi-Hansberg (2022). Remote Work and City Structure. Chicago, UC.

Nathan, M. and Overman, H. (2020). Will Coronavirus Cause a Big City Exodus? Environment and Planning B: Urban Analytics and City Science, 47(9):1537–1542.

SPECIAL SESSIONS