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Work from Home and the Evolution of Cities

Joint work with: Brian Greaney and Stijn Van Nieuwerburgh

Abstract

We study how the rapid rise of work from home (WFH) since 2020 has transformed cities and affected the welfare of their residents. We develop a dynamic spatial model with forward-looking households who choose residential location, workplace location, housing tenure, and WFH frequency. The model features commuting, costly migration, uninsurable income risk, housing-market frictions, commercial and residential real estate, and local public finance: local taxes fund endogenous amenities. We interpret the post-2020 economy as a transition to a new long-run spatial equilibrium and characterize the resulting paths of residential and commercial real estate prices, the locations of residents and jobs, income sorting, commuting, local tax revenues, amenities, and welfare. The model provides a framework for quantifying whether WFH triggers an urban doom loop, whereby declines in commercial real estate values erode the local tax base, reduce amenities, and further depress demand for central-city locations. We use the framework to evaluate return-to-office mandates and fiscal transfers. We also study office-to-residential conversions as a way to increase housing supply as well as speed up transition in response to the WFH shock.

±¬ÁϳԹÏÍø the speaker

is an assistant professor at the University of Southern California and a visiting fellow at Kyiv School of Economics. His research areas include urban and spatial economics, macroeconomics, and real estate. In his recent projects, he focuses on developing a new generation of dynamic quantitative spatial models, understanding housing supply constraints and their implications, and studying how work from home reshapes cities. Andrii completed his undergraduate studies at Kyiv National Economics University and his PhD at Universitat Autonoma de Barcelona.

Language

English

This is a free seminar. Registration is mandatory.