Working Paper: NBER ID: w30197
Authors: Jose Maria Barrero; Nicholas Bloom; Steven J. Davis; Brent H. Meyer; Emil Mihaylov
Abstract: The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanism in the wage-setting behavior of U.S. employers, and we develop novel survey data to quantify its force. Our data imply a cumulative wage-growth moderation of 2.0 percentage points over two years. This moderation offsets more than half the real-wage catchup effect that Blanchard (2022) highlights in his analysis of near-term inflation pressures. The amenity-values gains associated with the recent rise of remote work also lower labor’s share of national income by 1.1 percentage points. In addition, the “unexpected compression” of wages since early 2020 (Autor and Dube, 2022) is partly explained by the same amenity-value effect, which operates differentially across the earnings distribution.
Keywords: remote work; wage growth; amenity value; national income
JEL Codes: D22; E24; E25; E31; J30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shift to remote work (J62) | amenity value of employment (J68) |
| amenity value of employment (J68) | wage growth moderation (J38) |
| shift to remote work (J62) | wage growth moderation (J38) |
| amenity value gains (Q51) | labor's share of national income (E25) |
| amenity value effect (Q51) | compression of wages (J31) |