The impact of working from home arrangements on urban sprawl when the firms pay for the “home office”
Rémi Le Boennec (École des Ponts, CIRED)
Following the Covid-19 pandemic, many working from home (WFH) arrangements have been contracted between firms and working households. While firms can save space at the workplace, additional housing surface areas are required for home-based activities. Can these partial transfers of activities from work- to residential places be compatible with urban sprawl containment? In this paper, we use a standard urban economics monocentric model to determine the extent to which urban sprawl containment may be achieved despite WFH, depending on the type of agent that pays for the additional housing costs required for home-based activities. We compare three WFH scenarios with a reference case without WFH: (1) If additional housing costs are entirely covered by households, (2) If such costs are entirely covered by firms, and (3) If they are partially covered by firms (for the share of home-based activities only). We emphasize two main results: (1) Urban sprawl containment may be better achieved in the third scenario compared with the first and second ones (partial coverage of the additional housing costs by firms). Contracting WFH arrangements while containing urban sprawl is thus possible, even with higher shares of home-based activities, at the condition of maintaining the wage rate at a sufficiently low level. (2) Urban sprawl containment may even be better achieved in the third scenario compared with the reference case (without WFH), at an opposite condition on the wage rate, that must be higher than the previous threshold.