The Zoom City: Working From Home and Urban Land Structure

How would cities change if working from home (WFH) persisted in the post-pandemic era? This paper investigates the impact of WFH in the internal structure of monocentric cities, where production is characterized by management and employee spillovers. We find that business land rents decrease, while residential land rents fall close to the business center and increase in the suburbs. WFH raises urban productivity and average wages only in large cities. The paper also studies the optimal fraction of WFH from a residents and welfare point of view. Our results suggest that workers-residents have incentives to adopt an inefficiently high WFH scheme. We finally discuss the implementation of remote work in the short run. We show that WFH implies higher benefits for long distance commuters and lower benefits or even losses for firms and short distance commuters.