Five years after the pandemic reshaped the world of work, debate continues about what remote work actually does to people’s long-term earnings. Many argue that it disadvantages employees who work from home, as they are less visible to managers and less likely to receive promotions. For example, research has found that remote work reduced workplace interactions and limited promotion opportunities, while another study reported a significant negative impact on promotion prospects in a landmark study of a Chinese call centre.

Others contend the picture is more complex. More recent research has found a positive (though not statistically significant) productivity effect for hybrid workers, while other research showed that some workers are demonstrably more productive at home than in the office, depending on the nature of their work and individual circumstances.

New research from UNSW Business School offers detailed evidence on this question, and the findings present a challenge to anyone who has assumed that remote work is simply a flexible arrangement with no long-term career cost.

“The rapid expansion of working from home is one of the most significant changes in labour markets in recent years,” said research co-author Evgenia Dechter, an Associate Professor in the School of Economics at UNSW Business School. “We were motivated by the possibility that remote work presents an important trade-off. On the one hand, WFH may improve worker wellbeing, reduce commuting costs, increase flexibility, and lower firms' operating costs. On the other hand, it may reduce collaboration, mentoring, knowledge spillovers, and opportunities for career development,” said A/Prof. Dechter, who explained that understanding these trade-offs is important for workers, firms, and policymakers in Australia and beyond.

Gonzalo Castex, a Senior Lecturer in the School of Economics at UNSW Business School and co-author of the research, added: “Our goal was to better understand how working from home relates to productivity, human capital accumulation, and career progression,” he said. “We sought to distinguish between the relationship between remote work and current outcomes and its longer-run implications for wage growth and career advancement.”

No productivity penalty, but a career cost?

The research paper, Working From Home and Wage Dynamics, published in the Journal of Human Resources, drew on data from the United States Current Population Survey spanning October 2022 to September 2025. The researchers tracked more than 15,000 mid-career, full-time workers (8402 men and 6668 women) and measured how hours spent working remotely corresponded to changes in wages over a 12-month period. They developed a labour supply framework to separate the effects of working from home on current productivity from its effects on longer-term career progression. Importantly, this distinguished between what workers earn now and how quickly their earnings grow over time.

The first finding is likely to surprise those who expected evidence that remote workers are systematically less productive: the research found no statistically significant relationship between working from home and current wages. Workers who spent more hours working remotely were not earning less than otherwise comparable workers who spent more time on-site. On the surface, that sounds like a reasonable outcome for flexible working.

The second finding is where the story becomes more complicated.

The wage growth problem (and why it matters)

For men, a clearer pattern emerged from the research. Higher levels of remote work were associated with measurably slower wage growth over the following 12 months. Shifting eight hours per week from the office to home (while keeping total working hours constant) corresponded to a reduction in annual wage growth of between 0.6 and 1.5 percentage points across the study’s various specifications; the lower bound figure comes from the primary analysis, while the higher end reflects findings among workers with more stable employment arrangements. That range might sound modest, but compounded across a career, the cumulative difference in earnings is worth taking seriously.

The research also examined career progression directly. Men who worked more hours remotely were less likely to transition into managerial roles than their on-site counterparts. The connection between where you work and where your career goes, at least for men, appears to be real.

Learn more: The business case for hybrid work: Focus on profit (not productivity)

For women, the results were different. The relationship between remote work and wage growth was not statistically significant for women across the study’s specifications, though the researchers are careful to note that moderate effects in particular subgroups or work environments cannot be ruled out.

“The results imply that there is a potential trade-off,” said A/Prof. Dechter. “Greater flexibility and lower commuting costs may come with fewer opportunities for informal learning, mentoring, and career development, particularly for men.”

Dr Castex added that carefully designed hybrid working arrangements may help preserve the benefits of flexibility while ensuring that employees continue to receive training, feedback, and opportunities for advancement. “For workers, especially those early in their careers or aspiring to managerial positions, the intensity of remote work may have long-term consequences that are worth considering alongside its immediate benefits,” he observed.

Why men and women may experience remote work differently

Human capital accumulation is the foundation for the research framework. In plain terms, human capital is everything that makes a worker more valuable over time, such as skills developed through practice, knowledge gained from colleagues, feedback from managers, and relationships built through daily professional interaction; it is the engine of wage growth.

"Greater flexibility and lower commuting costs may come with fewer opportunities for informal learning, mentoring, and career development, particularly for men"

EVGENIA DECHTER

Research cited by the authors found that differences in social interactions between employees and managers could account for up to one-third of the gender gap in promotions, and that professional networks disproportionately benefit men in terms of both performance and career evaluations. Drawing on this evidence, the UNSW research suggests that if men in traditional workplace settings derive more career benefit from face-to-face networking and informal mentoring, the reduction in those interactions under remote work would logically affect men’s wage growth more than women’s.

The authors also raise the possibility that women working remotely may partially offset reduced physical presence through other communication channels and networks, and that women who face barriers to informal workplace networks in office settings may experience less disruption to their career trajectories when those networks are no longer the primary pathway to advancement. The research findings are consistent with the idea that remote work reduces opportunities for the kinds of informal interaction that, particularly for men, have historically driven career progression; a pattern the authors describe through the lens of social capital, broadly defined.

“Organisations should consider the possibility that remote work arrangements may affect different groups of workers differently,” A/Prof. Dechter explained. “Hybrid work policies that preserve opportunities for training, networking, mentoring, feedback, and visibility may help ensure that the benefits of flexibility are achieved without unintentionally slowing career progression for some employees.”

The trade-off workers, employers and policymakers need to understand

The practical implications of the research extend across workers, employers, and policymakers, and the researchers address each group directly in their conclusions.

For individual workers, the research points to a trade-off that is easy to overlook when evaluating a flexible arrangement. The immediate benefits of remote work (no commute, greater autonomy, better work–life balance) are tangible. As the paper notes, “some workers may be willing to accept lower wage growth due to higher costs or stronger preferences for working from home”, and that can be a rational choice. But it should be a deliberate one, based on clear information rather than the assumption that remote work is career-neutral. Maintaining professional visibility, seeking out mentoring relationships, and actively pursuing development opportunities takes more deliberate effort in a remote setting than when those interactions happen organically in a shared workplace.

For employers, the research raises questions about skill development pipelines. The paper notes that “sustained WFH could slow skill accumulation and innovation but also improve retention and work-life balance” – a genuine trade-off rather than a one-sided argument. Organisations that rely heavily on informal mentoring, proximity-based knowledge transfer, and relationship-driven career progression may need to build deliberate structures to replicate those dynamics in remote or hybrid environments.

For policymakers, the findings point to potential long-term effects on human capital and workforce productivity. The paper specifically emphasises “the value of supporting training and development opportunities in remote and hybrid work environments” as a policy priority – a recommendation that sits alongside, rather than against, the broader case for flexible work.

“Integration of remote work into regular work schedules creates an important challenge for workers, employers, and policymakers: how to preserve the benefits of flexibility without reducing learning opportunities, knowledge sharing, and career development that support long-run productivity and wage growth,” said Dr Castex. “While our results point to potential career costs associated with remote work, particularly through slower human capital accumulation and reduced advancement opportunities, they also suggest that these costs may be mitigated by targeted organisational practices.”

A/Prof. Dechter concluded: “As remote work becomes a permanent feature of many labour markets, firms will need to consider how remote and hybrid arrangements can actively support mentoring, collaboration, visibility, and professional development.”