The effect of the expansion of remote working during Covid-19 on the distribution of wages: Evidence from the Swedish and Danish labour market

Sammanfattning

This paper examines to what extent the rapid increase of remote working during the Covid-19 pandemic affected wage inequality in Sweden and Denmark. By implementing a difference-in-differences approach using Luxembourg Income Study (LIS) microdata, a comparison across occupations with high and low telework feasibility before and after 2020 is made. There is no robust evidence that the increase in remote working did have an impact on wage levels for either country. Real wages levels did increase post-pandemic however the relative wage gap between low and high teleworkable occupations remained unchanged. A heterogeneity analysis shows differences within groups. In Sweden highly educated men in high teleworkable occupations experienced significantly higher wage growth than men in low teleworkable occupations , whereas lower educated men experienced a relatively lower wage growth. In Denmark a small positive effect is found for lower educated women . These results suggest the expansion of remote work has limited aggregate distributional consequences in the short run. Nonetheless, there are some within-group differences caused by skill-biased mechanisms, indicating that remote work may enhance wage inequality along education and skill dimensions rather than across occupation.