Telework and the Changing Economy

Posted by Roberto Gallardo on March 02, 2018, in PCRD.

Many communities throughout Indiana and the nation have followed what used to be the “traditional” economic development model of attracting industries to their communities. While some communities were and are successful, many others have or continue to struggle to attract industries.

However, as the digital age unfolds, the socioeconomic landscape is changing. While high-tech innovative industries are also known to cluster, just as traditional industries did, opportunities open up for those communities that have struggled during the industrial attraction era.

Telework or telecommuting is not new. The term first appeared in the mid-1970s but today, thanks to more sophisticated connectivity and applications, telework is resurging and offers a viable economic development strategy, particularly for rural communities.

While the literature on telework has focused primarily on productivity, motivations, benefits, and barriers, it was not clear if this type of work had any impact on local economic development. PCRD recent research found that indeed, telework is associated with higher median household incomes at the neighborhood or Census tract level after controlling for multiple factors.

What does this mean?

This means that if decent broadband connectivity and digital skills exist in a community, telework should be pursued as an economic development strategy. The kick, however, is not to attract industry physically. Rather, make it easy for companies outside your community to hire local residents to do telework compatible jobs, as well as ensuring your self-employed and existing non-traded businesses plug into the digital economy. A series of policy recommendations are discussed as part of the research’s findings.

The bottom line is that existing economic development and workforce policies must adapt to better nurture, attract, and retain teleworkers. This 21st century approach to economic development may not solve all issues among communities with struggling economies completely, but it is definitely a strategy worth pursuing. 

See the Research