• Last updated: Mon, Nov 6, 2023Status: Ongoing
  • Oskar Nordström Skans, Adam Gill, and Lena Hensvik

Did COVID-19 have lasting effects on the spatial allocation of local services?

The COVID-19 pandemic had a massive temporary effect on people’s mobility patterns. Recent evidence suggests that part of this adjustment is here to stay – the pandemic appears to have had lasting effects on the incidence of working-from-home n many countries. Data from the US indicates that this may change the spatial economic structure of cities – the rise of the “donut” city. In this paper, we focus on the allocation of services as an indicator of real spatial effects of increased WFH induced by the pandemic. To this end, we use Swedish geo-located data on sales in restaurants (and other personal services) by neighborhood to investigate the extent to which these services have shifted from work-intensive neighborhoods towards residential neighborhoods during and after the pandemic. From aggregate data we know that the restaurant sector as a whole has recovered well, but did this recovery involve systematic spatial reallocation because of increased incidence of work from home?

We expect long-run effects to be larger when neighborhoods have i) workers with on average have longer commutes ii) workers belonging to demographics where remote work is more prevalent (female, old) iii) workers in occupations with tasks that can be done remotely (i.e. clerical occupations, not auto-mechanics or nursing) and iv) restaurants are serving lunches (proxied by low alcohol sales) rather than dinners. All of these factors should predict a larger decline in work-neighborhoods and a larger growth in residential neighborhoods. The project will separate between a pure persistence channel, which should be larger in areas (and restaurants) that needed to make larger adjustments during the pandemic (when local infections were more prevalent), and a more general shift-of-norms channel that is independent of the local severity of the pandemic crisis.

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