Productivity, amenity value, and the future of remote work

Although the impact of the COVID-19 pandemic has been declining over time, many firms continue to adopt a work-from-home policy. This column reports on a new survey of Japanese firms in the fourth quarter of 2021. It finds that the ratio of firms that allow working from home decreased substantially compared to the spring of 2020, along with the intensity of working from home. Most firms believed workers were less productive when working remotely and thus were likely to limit it once the pandemic ended. If employees have a strong desire to work remotely, there may be serious conflicts after the pandemic.

Following the onset of the COVID-19 pandemic, the number of firms and workers adopting working from home (WFH), or home-based remote work, increased substantially. Many firms have now moved away from remote work and back to working in the office, while some firms are planning to continue this workstyle into the future. The productivity of WFH is a key determinant in whether or not to continue this workstyle after the end of the pandemic.

Studies on the productivity of WFH during the COVID-19 pandemic based on surveys of individual workers have been conducted in many countries, including Barrero et al. (2021) for the US, Etheridge et al. (2020) for the UK, and Morikawa (2022a) for Japan. However, these studies have produced very different results. Bartik et al. (2020) and Morikawa (2022a) are examples of studies using firm surveys. Bartik et al. (2020) reported that on average, WFH reduced productivity by approximately 20%, based on a survey of small and medium-sized businesses in the US. Morikawa (2022a) indicated that among Japanese firms, the mean productivity of WFH is about 68% of the productivity in their usual workplace. However, both surveys were conducted in the first half of 2020, and WFH productivity is likely to have changed through learning effects and related investments as the COVID-19 pandemic continued.

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