Does Access to Information Technology Resources Reduce Rise in Regional Unemployment Amidst Global Disasters? Insights from COVID-19 in the United States

One major change in working conditions post-pandemic is the increased prevalence of transformations geared towards facilitating working from home (WFH), henceforth, WFH transformations. Particularly, firms have to allocate new, or reallocate existing, digital resources to facilitate the restructuring needed to support WFH. However, it is not clear to what extent access to internal and external IT resources plays a role in diminishing the said frictions. Moreover, it is not yet clear access to what types of IT resources help most in the expected WFH transitions.

Capitalizing on the opportunity provided by the introduction of stay-at-home orders across 48 states in the US during the first wave of COVID-19 and natural variations in the availability of IT services and resources in different regional (county-level) areas, we use a difference-in-differences specification to examine the frictions of transitioning to WFH during those stay-at-home periods. Our identification strategy relies on the premise that because businesses in regions without proper IT resource access are devoid of the means necessary to transform jobs, at least a portion of non-transformable positions must be eliminated (most likely, temporarily).

After leveraging different identification strategies, our findings show that counties with adequate business access to IT resources experience lower rates of monthly unemployment after stay-at-home-orders enforcement, ceteris paribus. In a further step, we unravel access to the type of IT resources that are most instrumental in WFH transformations. Specifically, while evidence indicates that investments in DevOps, WFH accessibility products, and Network infrastructure may have smoothed some WFH transformation frictions, investments in Enterprise software, Database infrastructure, and Cybersecurity products may have exacerbated the said frictions. Our study provides insights for managers and policymakers as they prepare for the anticipated rise in WFH demands.