Working Paper: CEPR ID: DP15655
Authors: Gianni De Fraja; Jesse Matheson; James Rockey
Abstract: The Covid-19 health crisis has led to a substantial increase in work done from home, which shifts economic activity across geographic space. We refer to this shift as a Zoomshock. The Zoomshock has implications for locally consumed services; much of the clientèle of restaurants, coffee bars, pubs, hair stylists, health clubs, and the like located near workplaces is transferred to establishments located near where people live. In this paper we measure the Zoomshock at a very granular level for UK neighbourhoods. We establish three important empirical facts. First, the Zoomshock is large; many workers can work-from-home and live in a different neighbourhood than they work. Second, the Zoomshock is very heterogeneous; economic activity is decreasing in productive city centres and increasing residential suburbs. Third, the Zoomshock moves workers away from neighbourhoods with a large supply of locally consumed services to neighbourhoods where the supply of these services is relatively scarce. We discuss the implications for aggregate employment and local economic recovery following the Covid-19 health crisis.
Keywords: COVID-19; Lockdown; Work-from-home; Local labour markets; Teleworking
JEL Codes: R12; J01; H12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Ability to work from home (J29) | Geographic shift of economic activity (F69) |
| Geographic distribution of work-from-home capabilities (J61) | Local economic dynamics (R11) |
| Shift in worker location (J69) | Demand for local services (R22) |
| Shift of workers from high-density urban areas (R23) | Local consumption patterns (D10) |
| Shift of workers to low-density residential neighborhoods (R23) | Local consumption patterns (D10) |