From Columbia Law School's CLS Blue Sky Blog, August 21:
The rise of work-from-home following the COVID-19 pandemic sparked vigorous debate about its impact on productivity. While other studies have focused on routine tasks like call center operations or data entry, our recent study examines a high-skilled group: equity analysts, a cohort of professionals whose work demands creativity, intensive coordination, and significant time commitment. Using return-to-office (RTO) mandates imposed by brokerage firms as natural experiments, we find that in-office work significantly enhances analyst productivity – but at a cost.
The RTO Mandates
We identify 35 RTO mandates across 23 unique brokerage firms between 2020 and 2023. These mandates – typically requiring two to three office days per week and applying broadly across divisions rather than targeting specific departments – provide a natural experiment for studying the effects of workplace arrangements.
Using a difference-in-differences framework, we compare analysts required to return to office (treated group) with those who were not (control group). Both groups perform identical tasks: forecasting earnings for the same companies at roughly the same time.
Our results show that RTO mandates reduce forecast errors by 0.106 percentage points relative to the pre-RTO median of 0.713 – a 14.9 percent improvement. For a $30 stock, this translates to reducing forecast errors from approximately 21.4 cents to 18.2 cents per share. This improvement persists across both the 2020-2021 and 2022-2023 subperiods, suggesting the results are not merely artifacts of pandemic-specific conditions.
Who Benefits Most from In-Office Work?
The benefits of returning to office are not uniformly distributed. Younger analysts (35 years or younger) and those with less than three years of experience show substantial improvements in accuracy post-RTO, while older and more experienced analysts exhibit minimal change. This pattern suggests that remote work particularly disadvantages those who benefit from in-person mentoring and tacit knowledge transfer.
Female analysts demonstrate larger accuracy gains than their male counterparts following RTO mandates, suggesting they may face greater distractions when working from home. Additionally, analysts in Democratic-leaning states show stronger RTO effects than those in Republican states, potentially because analysts in Republican states were already more inclined to work in-office voluntarily.
The accuracy improvement is most pronounced for the first forecasts issued after earnings announcements rather than subsequent forecasts, suggesting that in-office work particularly matters when time constraints are tight....
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