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More working from home will change the shape and size of cities

Author

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  • James Lennox
Abstract
Experiences of and investments in working from home (WFH) during the COVID-19 pandemic may permanently alter commuting behaviour and employment practices, ultimately changing the shape and size of cities. Using a spatial computable general equilibrium (SCGE) model, we study the effects of a shift to working-from home on labour supply, housing demands and the sectoral and spatial structure of the Australian economy. The model accounts for households' choices of occupations, residence and work locations, and for trade and input-output linkages between firms in different locations and industries. Simulating increased WFH in selected occupations causes labour supply to shift towards these occupations at the expense of others. This is particularly favourable for many business services industries, which use the WFH occupations most intensively. Within cities, workers choosing WFH occupations opt for longer, but less frequent commutes from residential locations that are more attractive or have cheaper housing. Although this depresses house prices in inner areas, attracting workers choosing non-WFH occupations and non-working households, the net effects are flatter residential density gradients and increased urban sprawl. Jobs, become more centralised within cities and increase overall in the largest and most productive cities. Smaller cities and towns close to large employment centres attract more residents who commute out, but the majority of Australian cities and towns shrink, relative to the baseline.

Suggested Citation

  • James Lennox, 2020. "More working from home will change the shape and size of cities," Centre of Policy Studies/IMPACT Centre Working Papers g-306, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-306
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    References listed on IDEAS

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    Cited by:

    1. Stephen Glackin & Magnus Moglia & Peter Newton, 2022. "Working from Home as a Catalyst for Urban Regeneration," Sustainability, MDPI, vol. 14(19), pages 1-22, October.
    2. Leroutier, Marion & Quirion, Philippe, 2023. "Tackling Car Emissions in Urban Areas: Shift, Avoid, Improve," Ecological Economics, Elsevier, vol. 213(C).
    3. Le, Henry & Gurry, Finn & Lennox, James, 2023. "An application of land use, transport, and economy interaction model," Research in Transportation Economics, Elsevier, vol. 99(C).
    4. Kazufumi Tsuboi, 2022. "Shifting to Telework and Firms' Location: Does Telework Make Our Society Efficient?," Papers 2212.00934, arXiv.org.
    5. Mabel Andalon & Matthew Jones, 2022. "A simple model of working from home," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 25(2), pages 193-214.
    6. Vij, Akshay & Souza, Flavio F. & Barrie, Helen & Anilan, V. & Sarmiento, Sergio & Washington, Lynette, 2023. "Employee preferences for working from home in Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 782-800.
    7. Delventhal, Matthew J. & Kwon, Eunjee & Parkhomenko, Andrii, 2022. "JUE Insight: How do cities change when we work from home?," Journal of Urban Economics, Elsevier, vol. 127(C).
    8. Marion Leroutier & Philippe Quirion, 2021. "Tackling Transport-Induced Pollution in Cities: A case Study in Paris," Working Papers 2021.07, FAERE - French Association of Environmental and Resource Economists.
    9. Christian A. Nygaard & Sharon Parkinson, 2021. "Analysing the impact of COVID‐19 on urban transitions and urban‐regional dynamics in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 878-899, October.
    10. Parkhomenko, Andrii & Delventhal, Matthew J, 2023. "Spatial Implications of Telecommuting in the United States," Institute of Transportation Studies, Working Paper Series qt97q6c2rg, Institute of Transportation Studies, UC Davis.

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    More about this item

    Keywords

    commuting; working from home; telecommuting; SCGE model; COVID-19;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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