Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/270450 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. 2022-7
Publisher: 
Federal Reserve Bank of Atlanta, Atlanta, GA
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 US 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: 
remote work
amenity value
wage growth
inflation dynamics
recession risk
business expectations
labor's share of national income
wage compression
JEL: 
J3
E31
D22
E24
E25
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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