DeFiPP Seminar

Working from home: Too much of a good thing?

We develop a general equilibrium model with three primary production factors—land, skilled, and unskilled labor—and three sectors—construction, intermediate inputs, and final consumption—to study how different intensities of telecommuting affect the efficiency of firms that embrace home working, as well as its impact on the whole economy. In doing so, we pay particular attention to the effects of increasing working from home (WFH) that go through changes in the production and consumption of buildings: more WFH reduces firms’ demands for office space, but increases workers’ demand for living space since additional room is required to work from home. We find that more WFH is a mixed blessing: the relationship between telecommuting and productivity or GDP is inverse-U-shaped, whereas telecommuting raises income inequality. Hence, WFH is not a panacea since an excessive downscaling of workspaces may be damaging to all and exacerbate economic inequality.We provide a general non-parametric framework of variable markups in the presence of production networks. The framework does not impose structural assumptions on market environment, demand or production, and delivers elasticities that can be directly taken to the data. Our approach allows to estimate pass-through and firms’ responses to environment’s prices without the need to estimate marginal costs, but relies on observed firm-level price changes and input shares. Combined with the observation that firms are connected through buyer-supplier relationships, in- complete pass-through and price competition have profound implications for propagation and aggregation properties in terms of the exchange rate disconnect puzzle, monetary policy and productivity shocks. 

 

Contact : Christian Kiedaisch - christian.kiedaisch@unamur.be
Télecharger : vCal