My Conversation with Ed Glaeser

I did David Cutler and Ed sequentially, based on their new co-authored book, here is the joint episode but there is also a separate link concerning Cutler.  Here is one excerpt from the general summary:

They joined Tyler for a special joint episode to discuss why healthcare outcomes are so correlated with education, whether the health value of Google is positive or negative, why hospital price transparency is so difficult to achieve, how insurance coding systems reimburse sickness over health improvement, why the U.S. quit smoking before Europe, the best place in America to get sick, the risks that come from over-treatment, the possible upsides of more businesses moving out of cities, whether productivity gains from remote work will remain high, why the older parts of cities always seem to be more beautiful, whether urban schools will ever improve, why we shouldn’t view Rio de Janeiro’s favelas as a failure, how 19th century fights to deal with contagious diseases became a turning point for governance, Miami’s prospects as the next tech hub, what David and Ed disagree on, and more.

And from my exchange with Ed:

COWEN: Let’s start with a simple question. All this enthusiasm about cities and agglomeration benefits — the pandemic comes along. A lot of people transition to work from a distance, and then we see big measured productivity gains. What has gone on there?

GLAESER: It reminds us that for many jobs, in a static sense, you can do this long-distance. You can make things work. I think many of us found this. We wrote this book in eight months over the pandemic year, distinctly away from each other, partially because there were no distractions, and all that was good.

However, you also need to recognize the limits of long-distance living. The most important of those limits is just it’s much less fun. It’s much less joyful, but while it seems as if it’s fine for static productivity, it seems distinctly more problematic for people learning and for onboarding new talent.

Let me just give you two types of studies, one of which is we have the call center studies. The father of that was the Nick Bloom paper, which was a randomized control trial in China. A more modern version is done by our students, Natalia Emanuel and Emma Harrington, which looks into American call centers.

Both of them find the same thing in terms of static productivity. If anything, it goes up, but the workers who go remote are much less likely to be promoted in both studies. One interpretation of this is that promotion in the call center work means that you actually are given the job of handling more difficult calls.

How would your boss know that you are good at handling difficult calls if they weren’t in the same room with you? How would you learn how to do those difficult calls if you weren’t around other people? So while the static productivity remains, you lose the dynamic benefits of being around other people.

Second piece of evidence it comes from Burning Glass Technologies and new hires. Even though Microsoft tells us that its programmers were just as productive, overall, new hires for programmers were down 42 percent between November 2019 and November 2020. Firms were clearly unwilling to take the same kind of risks of hiring new workers that they couldn’t inculcate in their corporate culture or screen them properly, or do any of those other things.

Even though measured productivity did well during the pandemic, there were still lots of disruptions. In particular, many younger workers who came of age really lost out as a result of this.

COWEN: If work from a distance goes fine in the short run, what’s the cross-sectional prediction about where it will persist in the future? Is it firms facing bankruptcy, firms with immediate projects now, possibly start-ups who will then later transition to all being together in one big happy family, but they’re afraid they’re going to fail before then? What should we expect?

GLAESER: I think we should expect young workers to be more likely to be brought together. Young firms, as well, because you’re very much at this learning, creative phase. I think the optimal work-from-home strategy is a couple of partners who are in an accounting practice and have decided they know each other perfectly well and are delighted to Zoom it in from wherever they are.

I think, unquestionably, working from home will remain a part of the economy. It may well be many workers end up spending 20 percent of their time working from home, even if they’re part of a generally full-time job. But for younger workers, for firms that are just getting started, I think being live is likely to continue being a major part of the work environment.

It also depends a lot on what your home environment is like. If you’re like us —  if you are a middle-aged professor who’s likely to have a comfortable home office, and maybe even not having kids at home anymore, certainly not kids who are crying all the time at home anymore — working at home is a lot more pleasant than if you’re a 23-year-old and live in a studio apartment in Somerville or New York or London.

Recommended!