COVID-19
Paper Session
Monday, Jan. 4, 2021 10:00 AM - 12:00 PM (EST)
- Chair: Stijn Van Nieuwerburgh, Columbia University
Office Hours
Abstract
We build a spatial equilibrium model of work in an office and work from home. Working from home entails no commuting costs but does not benefit from face-to-face interactions. We use the model to understand how the Coronavirus shock will affect the location of work and where workers live both during and after the pandemic. The pandemic shock lowers TFP at the office relative to that of work from home because of social distancing. In public transit-dependent cities, commuting costs also increase during the pandemic because of social distancing. After the development of an effective treatment or vaccine, TFP of work at the office returns to its pre-pandemic state but working from home is relatively more efficient for skilled workers because of accelerated technology adoption during the pandemic.Face-to-face Interactions, Tenant Resilience, and Commercial Real Estate Performance
Abstract
The COVID-19 pandemic has introduced an exogenous shock to the face-to-face (FTF) economy and the use of commercial space. By exploiting a new dataset that links tenants, commercial properties, and stakeholders (including equity holders and lenders) in these properties, we examine whether and how the dependence of commercial tenants' business operations on FTF interactions affect commercial real estate performance during the pandemic. We construct three novel FTF measures at both the property and firm levels to capture remote working by tenants, internal communication between coworkers, and external contact with customers. We find that firms holding properties with tenants that are less resilient to social distancing experienced greater declines in abnormal returns in response to COVID spread (growth in the numberof cases), more negative market reactions around lockdown and reopening announcements, and lower analyst earnings expectations. Evidence based on property-level mortgage spreads of collateralized loans is consistent with these findings. Our findings are not driven by variation in a building's property type or in a property-owning firm's property-type focus.
Spatial Implications of Telecommuting
Abstract
If the 2020 surge in working from home became permanent, how would the distribution of jobs and residents within and across U.S. cities change? To study this question, we build a quantitative spatial equilibrium model of job and residence choice with commuting frictions between 4,502 sub-metropolitan locations in the contiguous U.S. A novel feature of our model is the heterogeneity of workers in the fraction of time they work on-site: some workers commute daily, some always work at home, while others alternate between working on-site and remotely. In a counterfactual where remote work becomes more common, residents move from central to peripheral areas within cities, and from large coastal to small interior cities, on average. The reallocation of jobs is less monotonic, with increases both in peripheral locations and in the highest-productivity metropolises. Agglomeration externalities from in-person interactions are crucial for welfare effects. If telecommuters keep contributing to productivity as if they worked on-site, better job market access drives considerable welfare gains, even for those who continue to commute. But if productivity declines in response to the reduction in face-to-face interactions, wages fall and most workers are worse off.Discussant(s)
Kairong Xiao
,
Columbia University
Tim Landvoigt
,
University of Pennsylvania
Jack Favilukis
,
University of British Columbia
Morris A. Davis
,
Rutgers University
JEL Classifications
- Z0 - General