A New Equilibrium: COVID-19 Lockdowns and WFH Persistence

This paper documents a robust link between COVID-19 lockdowns and the uptake and persistence of working from home (WFH) practices. Exploiting rich longitudinal data, we use a difference-in-differences strategy to compare office workers in three heavily locked-down Australian states to similar workers in less affected states. Locked-down workers sustain 43% higher WFH levels through 2023 – 0.5 days per week – with a monotonic dose–response relationship. Persistence is driven by adjustments on both sides of the labor market: employers downsize office space and open remote/hybrid positions, while employees relocate away from city centers and invest in home offices and technology.