The Future of Work and Consumption in Cities after the Pandemic: Evidence from Germany

We estimate the impact of working from home (WFH) on the micro-geography of offline consumer spending in urban agglomerations. Our analysis draws on micro-geographic card-transaction data and WFH patterns in German cities between January 2019 and May 2022. We use a difference-in-differences design that exploits the spatially differential exposure to the WFH shock induced by Covid-19 through the local scope to expand WFH. Our estimates suggest that local spending increases by 2–3 percent per standard deviation higher pre-pandemic untapped WFH potential. These effects hold after the permanent lifting of pandemic restrictions, indicating persistent relocations of offline consumption within cities.