Productivity Dynamics of Working from Home

Yves here. Of course, I have a bias as a long-standing work from home type, since 1989. My humble belief is that the big productivity-killer of working at home is other people. Someone with a home office and family members who respect their work hours (as in leave them alone!) ought to be just as efficient as at the office.

Many managements are fond of the idea that workers have serendipitous interactions and also form informal relations that facilitates information sharing. While that is true and does have upside for the company, the flip side is that companies love meetings. I have found them to be mainly time sinks with only occasional exceptions.

By Masayuki Morikawa, President, Research Institute of Economy, Trade and Industry (RIETI). Originally published at VoxEU

Since the onset of the COVID-19 pandemic, the number of people working from home has increased rapidly. However, the productivity of working from home is not yet well understood. This column explores the changes in prevalence, frequency, and productivity of working from home in Japan over a year of the pandemic. Fewer workers were working from home in 2021 compared to 2020. While the productivity of working from home has improved, it is still lower than the productivity of working at the office.

Since the onset of the COVID-19 pandemic, the number of workers working from home (WFH) has been increasing rapidly. There has also been a rapid, parallel increase in research on WFH. We now know what workers need to be able to WFH as well as what type of workers are actually WFH. Findings generally show that highly skilled, high-wage, white-collar employees in large firms tend to WFH, meaning that the expansion of WFH has tended to increase inequality in the labour market. However, productivity of WFH has not yet been well understood.

Studies on WFH Productivity During the COVID-19 Pandemic

Currently, business managers and policy practitioners are interested in whether WFH will continue as a new workstyle after the COVID-19 pandemic ends. Productivity of WFH is a key determinant of whether WFH will persist or not, but quantitative evidence on WFH productivity is still limited. Studies based on surveys of workers include Etheridge et al. (2020), Barrero et al. (2021), and my work (Morikawa 2020).1 Since it is extremely challenging to measure the productivity of white-collar workers, who perform a large variety of tasks, all of these studies depend on the workers’ self-assessment of WFH productivity.

Etheridge et al. (2020) show that, on average, workers in the UK adopting WFH report little difference in productivity relative to productivity before the pandemic. In the US, Barrero et al. (2021) indicate that most respondents who adopted WFH report equal to or higher WFH productivity than productivity on business premises. My study (Morikawa 2020) was based on a 2020 survey of workers in Japan and documents that the mean WFH productivity was approximately 60% to 70% relative to working at the usual workplace and that it was lower for employees who were forced to start WFH only after the spread of the COVID-19 pandemic. To summarise, studies on the productivity of WFH under the COVID-19 pandemic are still limited, and the results are far from conclusive.

To explore the productivity dynamics of WFH during the COVID-19 pandemic, I extend the analysis of my 2020 study. I conducted a follow-up survey in 2021 to explore the changes in prevalence, frequency, and productivity of WFH during a year of the pandemic and discuss the future of WFH after the COVID-19 pandemic (Morikawa 2021).

Prevalence and Frequency of WFH

Our 2021 survey asked workers in Japan about the adoption and frequency of WFH. The responses show that 21.5% of workers were practising WFH, which is a decrease from 32.2% a year prior. Among only continuing (panel) respondents, the extent of the decline was larger: it decreased from 37.1% to 21.1%. Of the employees who responded to both 2020 and 2021 surveys, 41.7% stopped practising WFH, indicating that a non-negligible number of workers reverted to working at their usual workplace. In particular, individuals with lower WFH productivity had a higher probability of exiting from WFH.

In contrast, the mean share of WFH days (WFH days divided by weekly working days) is almost unchanged during the past year: 55.7% in the 2020 survey and 56.6% in the 2021 survey. Even for the subsample of those who responded to both surveys and who continued to implement WFH, the mean frequencies of WFH are almost unchanged (55.9% in 2020 and 54.3% in 2021). While the change in the extensive margin (adoption) is relatively large, the change in the intensive margin (frequency) is negligible.

Productivity Dynamics of WFH

The surveys asked the subjects to self-assess WFH productivity relative to one’s productivity at the usual workplace (= 100). The distributions of WFH productivity in 2020 and 2021 are in Figure 1. The figure shows that (1) the overall distribution has shifted slightly right, and (2) the lower end of the distribution has shrunk substantially. The mean WFH productivity has improved from 61 in 2020 to 78 in 2021 (where productivity at the usual workplace = 100). The subsample of panel employees shows a similar pattern: the mean productivity has improved from 61 to 77.

Figure 1 Change in WFH productivity distribution

The WFH productivity of those who continuously engaged in WFH improved from 70 in 2020 to 78 in 2021. The 8-point increase in WFH productivity comes from, for example, learning effects and investment in WFH infrastructure at home. The mean WFH productivity in the 2020 survey of those who exit from WFH was 49, far lower than that of WFH continuers (70). This selection mechanism contributes to a 9-point improvement in mean WFH productivity. In short, (1) a ‘selection effect’ arising from the exit of low-WFH-productivity employees from WFH practice, and (2) the improvement in WFH productivity through a ‘learning effect’ contributed almost equally to the improved mean WFH productivity.

WFH After the COVID-19 Pandemic

Both the 2020 and 2021 surveys asked the telecommuters about their intention to continue WFH after the pandemic. The percentage of WFH workers who answered they would like to practice WFH at the same frequency as they currently do even when the COVID-19 pandemic subsides increased substantially from 38.1% in the 2020 survey to 62.6% in the 2021 survey (Figure 2). Even for the subsample of WFH continuers, the percentage has increased from 56.2% to 68.2%.

Figure 2 WFH after the COVID-19 pandemic

We posit that the possible reasons behind this change are (1) the improvement in WFH productivity, and (2) the increasing recognition of the amenity value of WFH. Since there was a strong positive correlation between the intention in 2020 to continue frequent WFH and the actual implementation of WFH in 2021, the result suggests that WFH may become a preferred work style even after the pandemic subsides. As described before, the productivity of WFH is, on average, still lower than that of the usual workplace, meaning that WFH has a high amenity value for teleworkers.

However, according to a survey of Japanese firms conducted in late 2021, the majority of firms are planning to discontinue the WFH practice and revert to the conventional workstyle after the end of COVID-19 (Morikawa 2022b). These contrasting results indicate that there is a large gap between firms’ interests and the preferences of WFH workers. From the viewpoints of the productivity-wage parity and the compensating wage differential, it is possible that WFH workers’ relative wages will be reduced. However, since it is difficult to accurately capture the productivity of individual workers who perform WFH, there is a potential that conflict between workers and management over WFH will arise after the pandemic.

Editor’s note: The main research on which this column is based (Morikawa 2021) first appeared as a Discussion Paper of the Research Institute of Economy, Trade and Industry (RIETI) of Japan.

See original post for references

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  1. PlutoniumKun

    Just from personal anecdote, my employer found very little impact on productivity – by some measures it was increasing. But there is a huge variation between those people with good home environments for work (big houses, spare room, someone to look after kids) and those in other situations.

    The big problem my organisation has had to deal with are newer recruits. They’ve found it enormously stressful to start up work from home without the sort of informal help they would normally get to come up to speed. This applies as much to experienced people who just need to get into the way my organisation works as it does for new graduates. On two occasions in the past year I had to sit in the evening (I tend to work better late, I usually go to my office – I live very close to it – in the late afternoon to do things I can’t do at home) with a colleague literally crying from stress. In both cases, they were very new to their roles and found the lack of informal support very isolating – they found coming into an empty office building as intimidating as working from home. But thats of course primarily an issue of poor management.

    1. David

      I think there’s a pervasive failure in these sorts of studies to distinguish between the productivity of individuals and the productivity of teams and organisations. If ten individuals are each as productive at home as in the office, this does not mean that the team as a whole will be. It also depends on the nature of the work. If you are writing a technical report for a small audience, then you may be more productive working on it from home. If you are trying to define a new strategy to which a whole lot of people will have to agree, there’s no substitute for personal contact. I don’t think I’ve done a job in my life that hasn’t depended for its success on informal meetings and the cultivation of good personal relationships. Formal meetings are also important (organising and running them is an art, but it can be taught) and they are almost impossible to do except in person.

      In addition, of course, there’s a whole host of organisation level issues, from day to day team management up to recruiting, training, promoting, disciplining etc. which frankly can’t be done effectively except in person. I suspect that the real problems of WFH at the organisational level won’t start to show up for a year or two yet.

      1. Anthony G Stegman

        Lots of people don’t actually work in teams, even if management refers to their reports as a “team”. That is mostly just a buzzword. Many people toil away with little need for collaboration with others. This includes engineers and scientists. They can post their work on internal systems for others to access if they need to without actually talking to each other.

        1. HeavySide

          If an engineer thinks they can work in a vacuum as you say, then either they aren’t doing much of importance or they suck at their job. Productive engineering work requires a great deal of communication and coordination.

    2. Terry Flynn

      Great point PK. I am glad that I did a month of in office working at first – you NEED other secretaries to listen in to dictations by clinicians who really can’t dictate. You would have nervous breakdown without them as you question your ability to “hear right”.

      When i learnt their idiosyncrasies I rapidly moved to 50/50 WFO/WFH.

      Now I just tell the awful ones “unintelligible”. If they complain my boss will tell them “errr he’s former professor of health, PhD in med stats and was dictating in 1998”. Not my problem.

  2. JMM

    Another personal anecdotal point: I work for a company whose management was very much into the “we’re coming back to the office as soon as there are no bodies on the streets.” Of course, circumstamces didn’t allow for this. And I work in a field that has adopted WFH massively, so people were making understandable noises: if we’re forced to go back to the office, here are my 2 weeks. Productivity-wise there was no big change. Some people adapted quite fast, some people struggled more with it, for a variety of reasons (lack of proper space, kids at home, etc.) Nevertheless, projects were being done on time. We have a Serendipity Mechanism (TM), it’s called “informal chat channels”, and they work well.

    Now management has come to a very pragmatic middle ground: those who prefer the office, it’s open to them. Those that prefer to work at home, please make yourselves comfortable. They’ve come to understand that as long as work gets done, it doesn’t matter what desk you’re using.

  3. Lemmy Caution

    Another productivity killer for those who work at home — the dreaded “You’re going to be home anyway, so can you take care of X” assignment from the significant other.

    Examples include, “You’re going to be home anyway so can you call the insurance company to ask about that missing EOB?”

    Or a more extreme example, “You’re going to be home anyway so can you take the dogs for a walk, figure out a marinade for the pork we’re having for dinner and do a couple loads of laundry cause I need socks?”

  4. FriarTuck

    Anecdote from my experience:

    The work from home paradigm is primarily a management challenge.

    My company was unwilling to make enough changes to truly accommodate the challenges that WFH presents. Yes things changed, but not enough to make WFH feasible long-term.

    Firstly: the tools. The people who had the hardest time with adapting to WFH are those who either refuse or have trouble with learning and using remote communication tools. Be that meeting-based tools, such as Zoom, GTM, etc, or direct communication tools such as Slack, Teams, or even things like Discord. The people I spoke to who have adamantly refused promoting WFH typically are older and claimed that they felt isolated when working from home. Yet when I suggested moving to using team-based communication tools, they balked and said they would only do it if upper management declared the tools necessary.

    Secondly: expectations. The people who were least productive at home were also the people who are typically least productive in the office. Unfortunately, bad management types are awful at managing expectations of productivity – ensuring that goals are achievable and ambitious – rewarding those that meet them and working with those who don’t to figure out ways of doing so. Their strategy of “popping by” and hoping that upper management’s Eye of Sauron (mere presence) is enough to motivate people simply doesn’t work with WFH. (In my experience, it doesn’t work in the office either, but I digress)

    Thirdly: trust. I know, I know. Engendering trust in a workplace is something that affects everything, whether or not WFH is implemented. But with WFH, there’s an extra layer of distrust that managers have that people are fobbing work off, that people are doing their business “during work hours” even though everyone I talked to who did WFH probably worked longer and harder when WFH even though it wasn’t exactly during a 8-4 window. But, trust is a two way street, and those managers I’ve talked to how have particular difficulty not having “tabs” on people when they can see their butts sitting in chairs refuse to acknowledge that WFH has benefits.

  5. MT_Wild

    My office was at a field station. Very slow internet speeds, poor cell connectivity. Prior to the pandemic I already worked from home 2 days a week to use my home internet to download large files that I could not access from work.

    We relocated during the pandemic to a house that has fiber optic internet. The office internet is still horrible. I can’t see any of us going back without infrastructure improvements. The new normal of video chats and cloud data storage has only increased our connectivity issues. I can only imagine other government offices are experiencing the same thing.

    I feel like I’m better connected to my actual collaborators and freed from the pointless recurring meetings I used to have to attend.

  6. Jung

    I had much less motivation to do my university work online because of decreased feeling of obligation to my community, and need to avoid embarrassment. To a lesser degree modern computer software (applications requiring internet even more so) are more often designed for distraction than work which may have reduced my productivity further. I wonder what the exact causes of the reduction in productivity on average is for Japanese.

  7. Larry

    I’ve switched jobs during the pandemic. Both companies I’ve been at had record years with no travel (sales hates it, I know sales people that live for elite travel status) or work from the office. That says something about the productivity of remote work. Prior to the pandemic I would just grab a hot desk in my local office or where I was travelling if there were important people to meet with. I intend to keep that interaction. Traffic in metro Boston is awful and I can’t see returning to 2+ hrs in my car a day for no reason. My development team is in Shanghai, my direct lead is in Chicago and my peer colleagues are in San Diego and Alaska. Not too sure an office in Waltham, MA makes a lot of sense for me.


    I’ve run into countless examples of white collar workers who add negative value to companies who believed they were productive. They looked like they were productive, they acted like they were productive but their output was 0 or negative to the company.

    To some extent, I think working from home forces those people to face reality. Their impromptu 3 hour meetings about sales philosophy or dissection of operations or ranting about some competitor is more difficult to do since scheduling a formal meeting on these topics is a bit…obvious.

    These surveys pick up that they feel less productive – but the reality is more that they’re less able to waste other people’s time and to looks busy at a surface layer.

    The most productive people I worked with back in the pre-covid days would seek isolation. Locking themselves up in conference rooms or coming in early or late when there were less distractions. The least productive people love office environments.

    Not sure how anyone gets around this bias in measurement for self reporting.

  9. Arizona Slim

    While my mother was still teaching school, I told her about a former boss’s job, which consisted largely of going from one meeting to another.

    My mother’s reaction: “That’s not a job, it’s a sentence.”

    Trust me, I left that organization before I had any chance of being considered for that boss’s job. I didn’t want it.

  10. BrianM

    I’m pleased to see in the underlying paper, the author did look at commuting and has adjusted for it. I did wonder to what extent longer hours would be used to make up lower productivity.

    But Figure 2 looks like a huge challenge for companies. Over half of companies want to abolish WFH, while only 11% of employees do. That’s a huge tension that has to be resolved. Of course, its far from an either/or and, in my circles, hybrid working is the new buzzword. It may be interesting to what extent companies will be forced into it even if they don’t want to if they can’t keep staff otherwise… And, assuming the loss of productivity is correct, what effect does that have in aggregate for companies? Can they tolerate that for the sake of keeping staff or can they work to improve it? Will we see employees earning the right to WFH? So many questions and I’m genuinely intrigued!

  11. Anthony G Stegman

    The only real benefit that I see from working in an office or shop environment are the lunch break gettogethers in the cafeteria and break room. During the pandemic I’ve been missing that socializing. I haven’t been missing the meetings and the hovering management. Over my many years in the workforce there have been numerous marriages that developed from office romances. These are now likely a thing of the past for the most part. That is unfortunate,

  12. Anthony G Stegman

    I recall public opinion polls from years past that asked what the ideal commute time is for commuters. 20 minutes was the agreed upon ideal for the majority of poll responders. I personally happen to agree with that. A 20 minute commute allows time to switch gears and get into work mode going to the office, and getting out of work mode on leaving the office. Five minute commutes are too short, and two hour commutes way, way too long.

    1. jefemt

      Is that on foot, bicycle, bus, or train? Yust Kiddink!!

      Back when I was a Mortgage Broker (you come in broke, needing a loan, and leave Broker…) while our town was going through gentrification, and workforce housing was 30 miles distant, I warned folks that were on the upper end of the borrower’s ideal front-end and back-end ratios, that if and when oil and gas became ‘dear’, their work commute could become a part of an ugly algebra: Money to gasoline, housing expense, utilities, food? Savings and/or vacation/life experience? Fuhgeddaboudit

      I think we are getting there- heck, maybe we have arrived!

  13. redleg

    My productivity and collaboration time with my coworkers both increased during WFH. Collaborations changed from talking in the halls and at cubes, which the various managers hated to see, to skype and phone calls which management never knew about. However, despite the improved working conditions I resigned that position midway through 2020. Had WFH been the norm all along, I wouldn’t have left that job for self- employment.

  14. VP

    I have been a remote worker for 6 years in an enterprise with distributed on-site teams. We used to travel to one site and meet F2F for key meeting or strategy sessions.

    When Covid forced everyone to WFH, I found myself coaching multiple teams on how to manage the boundary between work and home life. Other than that, WFH did not decrease productivity for our division as a whole. In fact, it became much easier to separate out the better performing teams from the team that have opportunities for improvement!

    Now, there is a subtle push to come back to the office, to start the travel etc. etc, mostly from folks who have low trust inherently. Let’s see where things land as the teams are not really into getting back to the Dress up-burn gas-sit intraffic and then in cubicle all day to perform the same job.

  15. Acacia

    Perhaps this is impolitic, but isn’t Japan — with its prevalent workaholism, panoptic office spaces, karoshi, you-must-hang-around-till-the-boss-leaves unspoken rules — kind of a difficult case for a study of WFH productivity?

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