RIETI Report March 2021

The productivity of working from home: Evidence from Japan

Working from home has been a topic of interest ever since creative types became able to use computers to create material or code and to turn their creations into a profitable product as a remote employee or contract worker. Now, with the restrictions in place due to the COVID-19 pandemic, the idea has gained new energy and in many cases around the globe, people were forced to adopt this in order to ensure the survival of businesses. But how is the system actually being employed, and to what effect? In this column, RIETI President Masayuki Morikawa utilizes an original survey targeting Japanese firms, conducted from August to September 2020, to analyze the degree to which it has been implemented and the resulting effect on productivity, in addition to identifying barriers to adoption and success.

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The productivity of working from home: Evidence from Japan

MORIKAWA MasayukiPresident, RIETI

Working from home has become much more prevalent across advanced economies during the Covid-19 pandemic. This column uses survey data from Japan to explore how widely working from home has been adopted across industries and how productive employees are at home. It finds that the overall contribution of working from home to labour input is surprisingly small. Even where firms adopted the practice, many employees did not exploit it; and even those who did work from home did not necessarily do so throughout the week. The firm survey responses suggest that across industries, the average productivity of employees when working from home relative to at the workplace is 68.3%, which is similar to the findings from an employee survey. The results suggest that there is room for improvement to make working from home more feasible.

Since the onset of the Covid-19 pandemic, working from home (WFH) has been increasingly implemented in major advanced countries. Before the crisis, the percentage of workers participating working from home was approximately 10% in major advanced countries. The number of workers who conduct their jobs at home increased suddenly in March 2020. But productivity at home compared to the usual workplace – which is a key parameter in assessing the impact of WFH on the economy – has not been well understood.

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