The Research Brief is a short take about interesting academic work.
If companies allowed more of their employees to permanently work from home, businesses would gravitate toward city centers, while people would primarily live in the periphery, resulting in less traffic congestion and falling real estate prices downtown.
Those are our main findings from a model we created to forecast pandemic-driven changes in Los Angeles. Many of these changes were beginning to happen back in the spring of 2020, when we began this research. We wanted to build a model that could show the effects of more widespread telecommuting over a long period of time post-pandemic.
Our model is like an artificial world – think Sim City – in which virtual people choose where to live and where to work. Virtual companies provide jobs to workers, while virtual real estate developers provide offices, warehouses and housing, setting prices that match supply with demand.
Using pre-pandemic information about where people lived and worked as well as their commutes, we built the model of the Los Angeles metropolitan area with economist Matt Delventhal. The model also uses pre-pandemic data on commercial and residential real estate prices.
From 2012 to 2016, fewer than 4% of workers telecommuted in the Los Angeles metro area, according to our calculations from the American Community Survey. Today that figure is nearly 40%. Based on estimates that about a third of workers in Los Angeles have jobs that could be done remotely, our model predicts three important long-term effects if telecommuting at around this level becomes permanent:
- Residents would increasingly move from city neighborhoods to the suburbs, while companies would gravitate to the center.
- Average residential and commercial real estate prices would fall in central city locations, while housing prices in the suburbs would increase.
- Traffic congestion would ease everywhere and commuting time would drop.