Economics Seminar

Speaker: Simone Nobili (Università di Cagliari) - Remote work and incentives before and after the pandemic 

Abstract - We propose a firm-worker model which jointly explains two recently emphasized empirical observations: the post-pandemic persistence of remote work and the rise of performance-based incentive schemes. In our framework, an unpredictable pandemic shock prevents the worker from working at the business premises. Under realistic conditions, this shock induces the firm 1) to invest in an infrastructural cost ensuring the feasibility of remote work, 2) to increase the share of workers paid with the performance-based scheme and 3) to permanently switch from the 'office' to the 'remote' business model for at least the subset of more productive worker. A key prediction of the model is that a sufficient reduction in the effectiveness of the technology to monitor effort in the 'remote' business model results in a reduction of remote work for low-productivity workers. We test this theoretical prediction both with a pooled OLS and with a triple DiD methodology and find robust support. Our results suggest that government policies might impact both not only diffusion of remote work but also the optimal choice of incentive schemes by the firm.