66 Finance & economics The Economist January 15th 2022
Remoteprospects
B
oston is notthe most popular of winter travel destinations.
But many economists were nonetheless disappointed by the
news that their profession’s grand annual meetings, scheduled to
take place in the city in early January, would again be virtual.
Greater experience with remoteconferencing technologies
meant that events unfolded more smoothly than they did a year
ago. That seemed appropriate for a conference dominated by spec
ulation about how covid19 might permanently alter the economy.
Many sessions were devoted to sketching out the probable fea
tures of the postpandemic world. New habits are sticking—and
economists have gathered the data to prove it. Take remote work.
Jose Maria Barrero of the Instituto Tecnológico Autónomo de Méx
ico presented results from research with Nicholas Bloom of Stan
ford University and Steven Davis of the University of Chicago.
Since May 2020 the economists have conducted a monthly survey
that, among other things, asks Americans about their plans to
work remotely. A year ago, the results suggested that remote work
would account for 20% of fulltime hours after the pandemic.
Over the past year, however, remote work has gained favour.
Based on the survey results from December, the researchers reck
on that 28% of hours might ultimately be worked from home. Em
ployees who were once undecided now say they might sometimes
work from home, said Mr Barrero. And respondents who had al
ways said they would toil remotely now plan to spend more time
doing so. In all, about 15% of fulltime workers are expected to be
fully remote in future, and just under a third to work in a “hybrid”
fashion—a dramatic change from before the pandemic, when just
5% of people laboured at home.
Remote work will persist because the experience of it has been
better than expected, and because workers and firms have invest
ed time and money (together estimated by Mr Barrero to be worth
about 0.7% of America’s gdp) in improving it further. But new ar
rangements will also be driven by employees’ preferences.
Though many workers look forward to returning to the office, a
sizeable chunk—about 15%—say they would definitely or probably
leave employers who do not offer remote options. This has created
an opportunity for young firms to attract talent by hiring remote
ly, said Adam Ozimek of Upwork, a freelancework platform. Astheopportunities to toil remotely have grown, people have
become happier to move away from big, expensive cities. Mr Ozi
mek noted that research published early in the pandemic suggest
ed that the most significant geographical impact of new working
arrangements would be on the distribution of population within
cities. Reductions in commuting time as a result of hybrid ar
rangements would produce a “doughnut effect” as people left city
centres for distant suburbs. But analysis of more recent data sug
gests that moves between cities are increasingly significant. Plac
es with high housing costs and a large share of workers in jobs that
can be done remotely have experienced slower growth in house
prices and rents than other areas. Whereas data from 2020 sent an
ambiguous message about migration trends, figures for 2021 show
clear outflows from highcost places, like California.
Some parts of the world may face uncomfortable adjustments
as a result, rather as deindustrialisation placed severe strains on
parts of America and Europe in the 1970s and 1980s. Research pre
sented at the conference by Conor Walsh of Columbia University
noted that the economic burden of the pandemic fell hardest on
lessskilled service workers in dense and expensive cities, who
previously catered to the needs of skilled workers. A permanent
exodus of whitecollar professionals could leave some lessskilled
workers trapped in places with declining job prospects.
A more remote future could yield some offsetting benefits,
though. Studies of pockets of the economy suggest that pandemic
related shifts hold the potential for productivity gains. Emma Har
rington of Princeton University discussed research showing that
the productivity of workers at callcentresrose by 7.6% when work
went remote, without a detectable decline in customer satisfac
tion. Dan Zeltzer of Tel Aviv University presented analysis of the
shift to telemedicine in Israel, which showed that the utilisation
of resources tended to rise and costs to decline, with little sign of
more missed diagnoses or other negative health outcomes.Virtually unrecognisable
Whether such gains will translate into a stronger macroeconomy
is less clear. Janice Eberly of Northwestern University credited re
mote work with reducing the decline in gdpin early 2020 by near
ly half relative to what it might otherwise have been. Yet although
remote work might boost companies’ profits by lowering the costs
of office space, and improve welfare by reducing commuting, she
doubted that it was a fundamental enough shift to lead to endur
ing productivity gains. That chimed with other, more general fears
about the postpandemic economy. Catherine Mann of the Bank of
England worried that business investment might prove insuffi
cient, held back by uncertainty about growth prospects and un
competitive markets. Though investment was strong in 2021, re
cent surveys show diminished appetite for capital spending, she
noted, compared with share buybacks and mergers.
Larry Summers of Harvard University observed that, although
central banks may struggle to control inflation in the short term,
longrun growth is likely still to be restrained by the same head
winds, such as demographic change, that blew before covid19.
The upshot of the conference often seemed to be that although
economies have done better during the pandemic than many peo
ple dared hope, they are likely to disappoint in its aftermath. But
as participants from around the globe zoomed seamlessly from
session to session, withouthaving to visit an airport or queue up
for coffee, one had towonderwhether such conclusions were not
a touch too pessimistic.nFree exchange
At an annual pow-wow for economists, speakers imagine a post-pandemic world