Does Working from Home Work? Evidence from a Chinese Experiment
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ARTICLE SUMMARY
Firms and economists disagree as to whether allowing employees to work from home is a good practice. This study shows that many workers are more productive when working from home; however, home workers may be promoted less often.
POLICY RELEVANCE
Giving some workers the option of working from home benefits employees and employers.
KEY TAKEAWAYS
- As of 2013, almost 50 percent of managers in the United States, the United Kingdom, and Germany were permitted to work from home; the share of managers who work from home in developing countries was surprisingly high, from 10 to 20 percent.
- Economists and businesses disagree as to whether allowing workers to work from home is useful management practice; some airlines allow call center workers to work from home, but others do not.
- Some wonder if allowing employees to work from home will promote better work/life balance; others wonder about the effect of working from home on commuting and land use.
- In this study, a Chinese firm chose some of its call center workers to work from home, while others (the control group) continued to work in the office.
- The home workers performed 13 percent better, mainly because they worked more minutes each shift.
- Promotion rates were lower than expected among the home workers, given their improved productivity, perhaps because they did not interact in person with team leaders.
- The firm saved $2,000 per employee working from home, and improved its overall productivity from 20 to 30 percent.
- About two thirds of the improvement came from reduction in office space, and the remainder from improved employee performance and reduced turnover.
- Attrition among home workers was 50 percent lower.
- About two thirds of the improvement came from reduction in office space, and the remainder from improved employee performance and reduced turnover.
- As a result of the study, the firm gave all workers the option to work from home, further increasing overall performance.
- Many who chose to remain in the office cited the loneliness of working from home.
- Most workers who did not perform well at home returned to the office.
- When workers were permitted to self-select their work location, the productivity gains enjoyed by those working from home increased to 22 percent.
- Many who chose to remain in the office cited the loneliness of working from home.
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About Nicholas Bloom
Nicholas (Nick) Bloom is the William Eberle Professor of Economics at Stanford University, a Senior Fellow of SIEPR, and the Co-Director of the Productivity, Innovation and Entrepreneurship program at the National Bureau of Economic Research. His main research interests are on measuring and explaining management and organizational practices across firms and countries, and trying to use this to explain differences in firm and country level growth. He also works on innovation and IT, looking at factors that affect these such as competition, tax, learning and Government regulations.
