In 1999, while still a more or less pure academic teaching at the Massachusetts Institute of Technology, I co-wrote a book on space economics with Masahisa Fujita of Kyoto University and Anthony Venables, then at the London School of Economics.
We were able to collaborate largely remotely, exchanging draft chapters via email.
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But to finish the project, we felt the need to spend some time meeting face-to-face, meeting (as far as I remember) during a week of intense work in Cambridge, Massachusetts.
I'm telling this old story partly to explain that I've long been fascinated by economic geography, and partly as a starting point for reflecting on a big geographical question for this new era of Zoom meetings and remote work:
What's going to happen to cities?
The connection will be clear in a few minutes.
Right now, it seems pretty clear that the COVID-19 pandemic will have lingering effects on where and how we work.
As I wrote recently, the rise of remote work, initially a response to fear of infection, seems to have set in motion a labor revolution that had been technologically possible for a while but needed to reach critical mass.
The era when the vast majority of white-collar workers spent from 9 a.m. to 5 p.m. in the office five days a week doesn't look like it's going back.
It's unclear how many of us will continue to work exclusively from home.
But even hybrid work, where employees go to the office two or three days a week, means a big reduction in demand for office space.
Credit card data suggests that only half of the office space in major U.S. cities is currently in use, with little sign of a return to the pre-pandemic situation.
Does this mean that big cities are about to enter a death spiral?
Probably not.
Trying to reflect on this question, I re-read an old article by Jess Gaspar and Edward Glaeser, written in the early days of the Internet.
Then, as now, many argued that greater ease of long-distance communication would undermine the raison d'être of big cities.
Gaspar and Glaeser argued, however, that there would be an opposite effect:
Technology would encourage increased personal and professional contacts.
Since getting the most out of these contacts would require at least occasional face-to-face interactions, these interactions could increase rather than decrease; And cities are still the best places to have lots of face-to-face interactions.
One interesting test they offered concerned an even older technology, the telephone.
Telephones were expected to reduce the demand for business travel, as it was not necessary to visit colleagues to communicate with them, it was enough to call.
However, the increase in phone use paralleled the increase in business travel:
The workers began to interact more with people from other cities, but to consolidate these contacts it was necessary to meet them occasionally in person.
And they argued that the Internet would have similar effects.
Hence my anecdote about academic collaboration.
Masa, Tony and I probably couldn't or wouldn't have done our work together without the internet, but if we hadn't launched the project, they wouldn't have needed to fly to the United States to do it.
So how does all this apply to the remote work revolution and its impact on cities?
Americans probably won't return to the office full-time.
But they will continue to work together, perhaps even more than before.
And some of this work will still need to be done face-to-face, which will mean that people will still want to live in or near big cities.
In fact, there is preliminary evidence that working from home makes urban life more appealing:
People who do not have to commute to the office every day spend more time frequenting shops, restaurants, etc., which improves the quality of their neighborhoods.
That said, remote work will surely shift metropolitan areas' centers of gravity away from their central business districts.
In 2021, economists Arjun Ramani and Nicholas Bloom coined the term "doughnut effect" to refer to a trend in which people moved away from expensive housing in urban centers and toward less expensive housing in less central locations.
Changes in house prices suggest that the doughnut effect continues even though many workers have returned to the office at least part-time, which makes sense:
Workers are willing to accept longer commutes in exchange for cheaper housing if they only have to commute two or three times a week instead of every day.
And it should be noted that the process by which working from home leads to increased amenities can apply to both suburbs and urban neighborhoods.
This is a casual personal observation, but the chances of eating and shopping in central New Jersey seem to be much better now than before the pandemic.
Will we see a long-term exodus, not just from urban centers, but completely out of large metropolitan areas?
Remote work certainly offers that possibility.
Still, I'm skeptical about whether it will be a big deal.
Why?
Because even fully remote work, which doesn't involve any regular visits to the office, doesn't eliminate the need for occasional face-to-face interaction.
Gaspar and Glaeser used the increase in business travel as an indicator that improved telecommunications would not necessarily hurt cities; Well, surveys indicate that, even though we all zoom in today, business travel is picking up rapidly and could soon reach pre-pandemic levels.
What this suggests, at least to me, is that even fully remote workers will, in general, want to live in places that have relatively easy access to major business centers:
the suburbs, more than the small towns of central America.
And I have one last hypothesis:
Some of the biggest beneficiaries of change in how and where we work may be hitherto declining small towns that are not too far from the big metropolises.
One of my favorite articles on urban economics is an old one, also written by Glaeser, this time with Joseph Gyourko, which pointed out that even cities that have lost much of their original economic raison d'être tend to decline slowly.
Why?
Because housing is durable, and declining old cities offer potential residents a cheap place to live.
Historically, these declining cities tended to attract less educated workers, often immigrants.
(I spent my early childhood in Utica, New York; my old neighborhood is now mostly Bosnian.)
But it's easy to see how those cities, if placed at an affordable distance from the urban bustle, could now attract highly educated remote workers, who in turn would create an urban services market that would attract even more such workers.
In other words, places like Kingston, New York, could become booming cities.
These are interesting times for urban America.
Zoom and other video conferencing apps haven't made cities obsolete.
But it seems that the pandemic will definitely change the urban landscape.
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