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December 21, 2025The Review of Economics and Statistics

The Effect of Working from Home on the Agglomeration Economies of Cities: Evidence from Advertised Wages

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Authors

SLSitian LiuYSYichen Su

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Overview

Analysis shows reduced urban wage premium in large cities due to working from home, indicating agglomeration economies are weakened.

Key Points

  • Investigate how working from home affects urban wage premiums and agglomeration economies in cities.
  • Analyzed job posting wage data
  • Compared wage changes before and after COVID-19
  • Conducted skill-level decomposition of wage returns
  • Substantial decrease in urban wage premium for high WFH adoption jobs
  • Reduction linked to decreased productivity premium of large cities
  • Wage returns to interpersonal skills significantly declined

Cite This Study

Liu et al. (2025) studied this question.

synapsesocial.com/papers/69473b64db9c958d0dfca7ebhttps://doi.org/10.1162/rest.a.1681
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