Adam Gill: Beyond the Office Chair: Working from Home, Labor Market Access, and the Spatial Distribution of Firms

Abstract

Essay I: Geographic frictions constrain hiring and worker-firm matching by limiting firms’ access to workers outside their usual commuting range. Work-from-home (WFH) arrangements have the potential to relax these frictions by expanding firms’ effective labor markets. Using population-level data from Sweden that link vacancy postings, employer-employee matched registry data, and data on job search behavior, I examine how signaling WFH in job ads reshapes firms’ labor market access at the application and hiring stages. I identify WFH offers using a generative-AI-based text-classification procedure that distinguishes between hybrid and fully remote jobs, and I construct novel measures of revealed commuting preferences and applicant quality using job seekers’ application behavior. I find that vacancies signaling WFH attract applicants from a geographically broader pool of job seekers. They also receive more applications on average and, for job ads with strong WFH signals, see an increase in quality for the top applicants. Both of these effects are driven by more distant applicants. At the hiring stage, I find that WFH-signaling vacancies hire workers from farther away, but I find no clear effect on average hire quality. By reducing the importance of commuting distance, WFH expands firms’ effective labor markets, changes the size and composition of applicant pools, and widens the spatial reach of realized matches.

Essay II (with Oskar Nordström Skans): When workers perform tasks remotely, managers lose direct oversight and monitoring becomes imperfect. Managers thus need sufficient trust in their employees to allow work from home. Using European microdata on manager trust ("would most people try to take advantage of you?"), we show that work from home is much more frequent in markets where managers exhibit greater trust. This pattern holds conditional on other dimension of societal trust, occupations, broadband internet access, digital skills, and workplace organization and culture. Manager trust is strongly associated with work from home both pre- and post-pandemic. These results suggest that manager trust is a crucial prerequisite for remote work.

Essay III (with Lena Hensvik and Oskar Nordström Skans): Local consumer services are delivered by on-site workers to on-site customers. These services are therefore insulated from the direct, supply-side, aspect of the work from home (WFH) transformation, while being directly exposed to any geographical relocation of consumer demand. Using Swedish administrative data covering all local service establishments over 2015-2024, we show that the persistent increase in WFH has caused a lasting geographic reallocation of service production toward residential neighborhoods, away from office districts, suggesting that consumer demand reallocation has a real impact on the economic geography of cities. We find increased sales, operating profitability, and survival rates among firms in residential areas relative to office districts, with effects that strengthen as longer-run firm entry and exit reinforce the initial incumbent adjustment. Our primary focus is on restaurants, but evidence from a wider range of personal services points to a similar reallocation in several time-intensive services such as hair and beauty and body care, while services requiring minimal time commitment, such as consumer laundry and dry cleaning, are unaffected. The impact on commuting distances for service sector workers is precisely estimated at zero.