Valuation of Work-from-Home Jobs: Selection, Preferences and Gender

Abstract

This paper characterizes remote work or work-from-home (WFH) jobs and quantifies the welfare gain from these work arrangements. Using data from the ATUS and CPS, I develop a measure of locational flexibility at work. Motivated by the patterns of sorting in the data, I then develop and estimate a generalized model of sectoral choice with amenities. The structural estimates point to differences by gender in the returns to education and experience, compositional differences as well as preferences. I also find that the gender wage gap persists in remote work at 3.9 dollars (without controlling for selection), most of which is determined by differences in the returns to observable characteristics. With the help of this framework, I estimate the willingness-to-pay (WTP) for these jobs. I find that women have higher valuation (WTP) of these jobs than men. On average, women are willing to pay 3.8 percent of the average hourly wage for locationally flexible jobs whereas men have a low willingness to pay (0.6 percent of hourly wage) for these jobs. Further, college graduates (both men and women) value remote work more than workers without college education. College educated women in particular value remote work the most at 4.3 percent of the hourly wage. The estimates also suggest that there may be specialisation within the household. Mothers who have more children have a higher valuation for remote work whereas fathers have a lower valuation.