RIETI Report October 21, 2022

Productivity, amenity value, and the future of remote work

Dear Readers,
Welcome to RIETI Report.
This bi-weekly newsletter will keep you updated with the recent columns, event information and research results by RIETI fellows and other leading economists in Japan and around the world.

In this edition, we present topics related to the work-from-home working style since the COVID-19 pandemic. There is a large gap between employers and employees regarding the intention to continue to use WFH practices after the pandemic. Using reports on a new survey of Japanese firms in the fourth quarter of 2021, RIETI President Masayuki Morikawa explains the reasons for the gap.

We hope you will enjoy it. If you have any feedback, we would love to hear from you (news-info@rieti.go.jp).
Editors of RIETI Report (Facebook: @en.RIETI / Twitter: @RIETIenglish / URL: https://www.rieti.go.jp/en/)

This month's featured article

Productivity, amenity value, and the future of remote work

MORIKAWA MasayukiPresident, RIETI

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.

To read the full text:

Related article

“Productivity dynamics of working from home”
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“A New Working Style in a Post-COVID-19 Era—Will Working from Home Spread in Japan?”
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“Teleworking Requires Careful Preparations”
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Related papers

“Productivity Dynamics of Work from Home since the Onset of the COVID-19 Pandemic: Evidence from a panel of firm surveys”
MORIKAWA Masayuki (President, RIETI)

“Productivity of Working from Home during the COVID-19 Pandemic: Panel Data Analysis”
MORIKAWA Masayuki (President, RIETI)

Our latest discussion papers

“Credit Default Swaps and Corporate Carbon Emissions in Japan”
OKIMOTO Tatsuyoshi (Research Associate, RIETI) / TAKAOKA Sumiko (Seikei University)

“Recursive Expectations Approach in Policymaking”
KOBAYASHI Keiichiro (Faculty Fellow, RIETI)

Event Information

RIETI Open BBL Webinar
“Japan-Hawaii Socio-Economic Innovation: Collaborations to advance economic development and climate resilience”
Denise Eby KONAN (Dean, College of Social Sciences University of Hawaii at Mānoa) will share a new program to leverage strong relationships between Japan and Hawaii through public private partnerships.
Time and Date: 12:15-13:15 (JST), Monday, October 31, 2022
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