Moral Hazard on Productivity Among Work-From-Home Workers Amid the COVID-19 Pandemic

TL;DR

This paper investigates the presence of moral hazard among work-from-home employees during COVID-19, finding general ex post moral hazard but no decline in efficiency at WFH-friendly firms, with nuanced effects based on health conditions.

Contribution

It provides empirical evidence on moral hazard in WFH settings during COVID-19 and highlights the role of firm policies and worker health conditions in productivity outcomes.

Findings

Ex post moral hazard is generally observed among WFH workers.

No moral hazard detected in productivity efficiency at long-term WFH friendly firms.

Workers with health or disability issues see productivity improvements under WFH conditions.

Abstract

After the outbreak of COVID 19, firms appear to monitor Work From Home (WFH) workers more than ever out of anxiety that workers may shirk at home or implement moral hazard at home. Using the Survey of Working Arrangements and Attitudes (SWAA, Barrero et al., 2021), the evidence of WFH workers' ex post moral hazard as well as its specific aspects are examined. The results show that the ex post moral hazard among the WFH workers is generally found. Interestingly, however, the moral hazard on specific type of productivity, efficiency, is not detected for the workers at firms with WFH friendly policy for long term. Moreover, the advantages & challenges for the WFH culture report that workers with health or disability issues improve their productivity, whereas certain conditions specific to the WFH environment must be met.