Implications of COVID-19: The Effect of Working from Home on Financial and Mental Well-Being in the UK

Abstract

In response to the threat posed by COVID-19, the UK prime minister announced on the 23rd of March strict lockdowns and introduced a new way of living and working, at least temporarily. This included working from home wherever possible. Many experts from the IT industry were long arguing about the potential for working from home, which suddenly now became indisputable. The objective of this study is to evaluate the impact of working from home on the individuals’ perception about their future financial situation and their mental well-being. We apply a difference-in-differences framework using data from the UK Household Longitudinal Study (UKHLS) combined with the UKHLS COVID-19 survey conducted in April 2020. Our findings suggest that those who have not experienced a shift from working at the employer’s premises to working from home became more concerned about their future financial situation. However, we find that working from home has a negative impact on mental well-being. On the other hand, we find no difference in the mental well-being when we consider those who work from home on occasion. The findings of this study have policy implications for government, firms and health practitioners. In particular, a balance between working from home and at the employer’s premises may provide both financial security and maintain the mental and psychological well-being at satisfying levels.