SIEPR Implications of Remote Work - Housing & Geography

The widespread adoption of work-from-home (WFH) has fundamentally reshaped urban housing markets, welfare distribution, and migration patterns. Increased WFH capacity drives up residential rents as demand for home office space rises, creating significant welfare losses for non-telecommutable workers who face higher housing costs without corresponding productivity gains. Agglomeration economies in city centers are weakening, further impacting the productivity of high-skill, office-based roles. Simultaneously, WFH is a primary catalyst for the recent surge in interstate migration, as remote workers decouple their residence from employment locations, moving at rates 50% higher than commuters. While remote workers gain utility from flexibility, the inelastic supply of housing exacerbates inequality, crowding out lower-income residents. Policy initiatives, such as converting commercial office space into residential units, offer potential pathways to mitigate these adverse welfare effects and stabilize housing affordability.