Does Working from Home Increase Job Satisfaction and Retention? Evidence from the COVID-19 Pandemic

Abstract

We study how working-from-home (WFH) impacts employee job satisfaction and retention using proprietary data on the WFH arrangements of over 70,000 employees. We find that the positive association between always WFH and job satisfaction vanishes after controlling for employee compensation, occupation, demographics, and aspects of their work environment (e.g., feeling appreciated at work, access to development & training opportunities). Furthermore, employees who always WFH have a higher intention to leave their job than employees who never work from home. In contrast, less frequent WFH arrangements relate to higher job satisfaction, but no difference in intention to leave. We draw on work-psychology and employee well-being models to explore two potential mechanisms. We find that more frequent WFH arrangements confer greater job satisfaction when employees work in jobs that require less coordination with others and when employees believe they have a "bad boss," suggesting that more frequent WFH arrangements have less impact on employees’ psychological states in these situations. The evidence reveals several nuances regarding the influence of various WFH arrangements on employee job satisfaction and intention to leave.