Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263601 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15385
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanism in the wage-setting behavior of U.S. employers, and we develop novel survey data to quantify its force. Our data imply a cumulative wage-growth moderation of 2.0 percentage points over two years. This moderation offsets more than half the real-wage catchup effect that Blanchard (2022) highlights in his analysis of near- term inflation pressures. The amenity-values gains associated with the recent rise of remote work also lower labor's share of national income by 1.1 percentage points. In addition, the "unexpected compression" of wages since early 2020 (Autor and Dube, 2022) is partly explained by the same amenity-value effect, which operates differentially across the earnings distribution.
Subjects: 
inflation dynamics
wage growth
amenity value
remote work
recession risk
business expectations
labor’s share of national income
wage compression
JEL: 
J3
E31
D22
E24
E25
Document Type: 
Working Paper

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