CEA

This research partnership between Alexandre Gori Maia (CEA/IE) and Yao Lu (Columbia University), funded by the Inter-American Development Bank (IDB), investigated how the earnings penalty associated with working from home (WFH) varied by gender and race before and during the COVID-19 pandemic in Brazil. Using a longitudinal dataset representative of the Brazilian population, the study estimated changes in earnings among workers who shifted from office-based work to WFH, and vice versa. The findings show that, during the pandemic, the earnings penalty associated with WFH declined for White and Black men but remained high for White and Black women. The study identifies three mechanisms that help explain these changes. First, more women than men transitioned to WFH during the pandemic, changing the balance between supply and demand for remote work. Second, WFH affected labor productivity differently across groups, especially by reducing the effective working hours of Black women. Third, remote work may have reduced workplace visibility and promotion opportunities, as White women WFH became less likely than White men to be promoted during the pandemic. The main policy implication is that measures to encourage remote work may unintentionally worsen gender and racial pay inequalities if they are not accompanied by broader changes in the social and labor-market norms that generate the earnings penalty associated with WFH.