Who Benefits from Remote Work?
Overview: In the paper titled, “Who Benefits from Remote Work?” NYU Stern Professor Arpit Gupta and co-authors Abhinav Gupta and Elena Simintzi (University of North Carolina) examine the implications of remote work on business performance and firm productivity.
Why study this now: Since the 2020 pandemic, there has been heated debate about the value of remote work. Many employees love the flexibility, but some high-profile CEOs argue that remote work destroys innovation and is bad for younger employees. Both policymakers and managers need to move beyond anecdotal evidence to understand if remote work is an economic net positive, or if it is eroding productivity.
What the researchers found: The researchers built a comprehensive dataset to answer this question. Their key findings include:
- Startups win: For firms under 10 years old, remote work boosts worker productivity by roughly 12%. Remote work allows these young companies to overcome hiring constraints and access global talent, helping them scale faster.
- Incumbents lose: For more established firms, remote work correlates with a 9% decline in productivity, validating the concerns of executives at major corporations who fear a loss of coordination and culture.
- Takeaway: Startups use remote work as a technology to compete for talent they couldn't otherwise access. Large firms, however, struggle with retention and complexity when dispersed.
What does this change: These findings challenge the narrative that a full return to office (RTO) is universally better for business. If bigger companies force RTO while startups stay remote, there may be a shift in where top talent chooses to work, which could spark a wave of business innovation.
Key insight: "Our findings suggest that remote work alleviates a key disadvantage that young firms face in hiring and expanding,” note the researchers, “while established firms experience challenges in adopting remote working practices."