A new equilibrium: COVID-19 lockdowns and WFH persistence

TL;DR

This study shows that COVID-19 lockdowns significantly increased and sustained remote work practices in Australia, with lasting effects driven by employer and employee adjustments to the new work environment.

Contribution

It provides empirical evidence of the long-term impact of lockdowns on WFH practices using longitudinal data and a difference-in-differences approach.

Findings

Locked-down workers maintain 43% higher WFH levels through 2023

Employees relocate and invest in home offices and technology

Employers reduce office space and adopt hybrid work models

Abstract

This paper documents a robust link between COVID-19 lockdowns and the uptake and persistence of working from home (WFH) practices. Exploiting rich longitudinal data, we use a difference-in-differences strategy to compare office workers in three heavily locked-down Australian states to similar workers in less affected states. Locked-down workers sustain 43% higher WFH levels through 2023 - 0.5 days per week - with a monotonic dose-response relationship. Persistence is driven by adjustments on both sides of the labor market: employers downsize office space and open remote or hybrid positions, while employees relocate away from city centers and invest in home offices and technology.