Working from Home and Consumption in Cities

We estimate the impact of the Covid-induced shift to working from home (WFH) on offline consumer spending within cities. The analysis builds on a postcode-level panel (2019-2023) of novel cellphone mobility and payment card transaction data for 50 German metropolitan areas (MAs). Identification uses local differences in the exposure to the WFH shock, measured by neighbourhoods' WFH potential: the fraction of residents with a teleworkable job. Difference-in-differences estimates show that higher WFH potential leads to persistent declines in morning mobility and higher local spending within MAs. We estimate an elasticity of spending with respect to WFH-induced mobility changes of -3.7%, driven by large MAs. Unlike in the US, the WFH shock did not spur business turnover, urban outmigration, or a sustained shift to e-commerce in Germany. We conclude that WFH primarily reshapes urban consumption by reallocating where people spend time.