Working from Home - What is the Effect on Employees' Effort?

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 and therefore are assumed to have a higher intrinsic motivation. Thus, we expect working from home to positively influence work effort of employees. For the empirical analysis we use the German Socio-Economic Panel (SOEP). To account for self-selection into working locations we use an instrumental variable (IV) estimation strategy. Our empirical results show that working from home has a significantly positive influence on work effort. Moreover, we find that also the frequency of working from home is crucial. The more often employees work from home, the higher is the work effort they provide.