Working Remotely? Selection, Treatment, and the Market for Remote Work†

Abstract

How does remote work affect productivity and how productive are workers who choose remote jobs? We decompose these effects in a Fortune 500 firm. Before COVID-19, remote workers answered 12 percent fewer calls per hour than on-site workers. After offices closed, the productivity gap narrowed by 4 percent, and formerly on-site workers’ call quality and promotion rates declined. Even with everyone remote, an 8 percent productivity gap persisted, indicating negative selection into remote jobs. A cost-benefit analysis indicates savings in reduced turnover and office rents could outweigh remote work’s negative productivity impact but not the costs of attracting less productive workers. (JEL D22, J22, J24, J63, L84, M12, M54)