Impact of Work from Home on Employee Productivity

This paper investigates how working from home affects employees’ work effort. Employees,who have the possibility to work from home, have a high autonomy in scheduling their work andtherefore are assumed to have a higher intrinsic motivation. Thus, we expect working from home topositively influence work effort of employees. For the empirical analysis we use the German SocioEconomic Panel (SOEP). To account for self-selection into working locations we use an instrumentalvariable (IV) estimation strategy. Our empirical results show that working from home has a significantlypositive influence on work effort. Moreover, we find that also the frequency of working from home iscrucial. The more often employees work from home, the higher is the work effort they provide. Workingfrom home is not as prevalent for part-time employees as for full-time employees. Only seventeen percentof the employees, who work from home, have a part-time work contract, whereas twenty-four percent ofthe employees, who work in the office, also work part-time. This distinction is highly statisticallysignificant. Hence, that there are differences between working from home and working in the office interms of part-time experience is not astonishing. Employees, who stay in the office, have on averagelonger experience in part-time work.