This study examines what happens to city size when telecommuting occurs. It assumes that more telecommuting occurs when telecommutersÆ labor cost share increases and/or workers adopt a more favorable attitude toward working from home. The study shows that telecommuting produces opposing forces that regulate the city size, one centralizing and the other decentralizingurban activities. These forces are examined in a city where workers and firms are given the option to freely mix working at the office and at home,and the cityÆs land use is endogenously determined. A rise in the productivity of an economy due to telecommunications technology could work to centralize urban activities, while urban contraction can occur with a fixed city population. (A) Reprinted with permission from Elsevier.
Abstract