DP19101 Work from Home and Interstate Migration
Interstate migration by working-age adults in the US declined substantially during the Great Recession and remained subdued through 2019. We document that interstate migration rose sharply following the 2020 Covid-19 outbreak, nearly recovering to pre-Great recession levels, and provide evidence that this reversal was primarily driven by the rise in work from home (WFH). Before the pandemic, interstate migration by WFH workers was consistently 50% higher than for commuters. Since the Covid-19 outbreak, this migration gap persisted while the WFH share tripled. Using quasi-panel data and plausibly exogenous changes in employer WFH policies, we address concerns about omitted variables or reverse causality and conclude that access to WFH induces greater interstate migration. An aggregate accounting exercise suggests that over half of the rise in interstate migration since 2019 can be accounted for by the rise in the WFH share. Moreover, both actual WFH and pre-pandemic WFH potential, based on occupation shares, can account for a sizable share of cross-state variation in migration.
