Seminarium: Morgane Richard, Stanford/PSE

Abstract:

I study the impact of the recent rise in remote work on households’ consumption, wealth and housing decisions, examining both short-run and long-run effects. Using detailed UK property-level housing data and a heterogeneous agent model with endogenous housing tenure and city geography, I show that remote work shifts households’ housing demand by increasing the demand for space and reducing the commuting costs. It affects where people live in the city and their housing wealth accumulation. The effects vary by access to remote work, income, and wealth. The rise in work-from-home can be compared to a suburb-wide gentrification shock as wealthy telecommuters opt for larger suburban homes, displacing marginal owners who turn to renting. In the long-run, work-from-home leads to the rise of a tele-premium and consumption inequality increases.