¶ Working from home and income inequality: risks of a ‘new normal’with COVID-19

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¶ BibTeX

@article{bonacini2021working,
  title={Working from home and income inequality: risks of a ‘new normal’with COVID-19},
  author={Bonacini, Luca and Gallo, Giovanni and Scicchitano, Sergio},
  journal={Journal of population economics},
  volume={34},
  number={1},
  pages={303--360},
  year={2021},
  publisher={Springer}
}

¶ Abstract

In the current context of the COVID-19 pandemic, working from home (WFH) became of great importance for a large share of employees since it represents the only option to both continue working and minimise the risk of virus exposure. Uncertainty about the duration of the pandemic and future contagion waves even led companies to view WFH as a ‘new normal’ way of working. Based on influence function regression methods, this paper explores the potential consequences in the labour income distribution related to a long-lasting increase in WFH feasibility among Italian employees. Results show that a positive shift in WFH feasibility would be associated with an increase in average labour income, but this potential benefit would not be equally distributed among employees. Specifically, an increase in the opportunity to WFH would favour male, older, high-educated, and high-paid employees. However, this ‘forced innovation’ would benefit more employees living in provinces have been more affected by the novel coronavirus. WFH thus risks exacerbating pre-existing inequalities in the labour market, especially if it will not be adequately regulated. As a consequence, this study suggests that policies aimed at alleviating inequality, like income support measures (in the short run) and human capital interventions (in the long run), should play a more important compensating role in the future.

¶ Notes and Excerpts

Our analysis relies on a uniquely detailed dataset relying on the merge of two sample surveys. The first one is the Survey on Labour Participation and Unemployment (INAPP-PLUS) for the year 2018, which contains information on incomes, skills, education level, and employment conditions of working-age Italians. The second sample survey is the Italian Survey of Professions (ICP) for the year 2013, which represents an Italian equivalent of the much more famous US Occupational Information Network (O*NET).

As the feasibility of an occupation of being performed from home is related to multiple dimensions regarding the specific task, this index is computed by taking into account replies to the following seven questions: (i) importance of working with computers; (ii) importance of performing general physical activities (which enters reversely); (iii) importance of manoeuvring vehicles, mechanical vehicles or equipment (reversely); (iv) requirement of face-to-face interactions (reversely); (v) dealing with external customers or with the public (reversely); (vi) physical proximity (reversely); and (vii) time spent standing (reversely). For each item, replies of workers are overall standardised to an index with a 0–100 range. The WFH feasibility index proposed by Barbieri et al. (2020) is then calculated through a simple average of these seven indexes.