Going Remote? The Role of Labor Market Competition

Using a comprehensive sample of work-from-home (WFH) job postings, we examine (i) trends in employer preferences for remote workers both before and during the COVID-19 pandemic and (ii) the effect of labor market competition on firm decisions to allow their employees to work remotely. We document a gradual upward trend in WFH job postings from 2010 to 2019, followed by a sharp increase in 2020 and 2021, precipitated by the pandemic. Consistent with firms responding to peer competition in the labor market, we find that employers are more likely to offer remote work when a larger proportion of their peers already do so. This effect is more pronounced after the onset of the COVID-19 pandemic as well as in areas with a higher cost of living or where women play a greater economic role in the workforce. Our results suggest that competition for talent in the labor market plays an important role in shaping organizations’ remote work strategies, especially when employee demand for workplace flexibility is high