Abstract Using job posting wage data, we find a substantial decrease in the urban wage premium for occupations with high working-from-home (WFH) adoption following the COVID-19 pandemic, accompanied by an employment shift away from large cities. Based on a conceptual framework, the empirical findings suggest that WFH adoption lowered the productivity premium of large cities. A skill-level decomposition reveals that the urban wage premium decline was largely driven by reduced wage returns to interpersonal skills in large cities, suggesting that the reduced urban productivity premium was a result of weakened agglomeration economies due to decreased interpersonal interactions in large cities.

Abstract Prior studies show that women are more willing to accept lower wages for shorter commutes than men. We show that gender differences in commuting preferences lead to a gender wage gap only if there is a wage penalty for shortening commutes, determined by the geography of jobs. We demonstrate this by showing that the commuting and wage gaps are considerably smaller among workers living near city centers, especially for occupations with a high geographic concentration of high-wage jobs. We highlight the geography of jobs as a key force that amplifies the impact of commuting preferences on the gender wage gap.