Pandemic, Telecommuting, and Agglomeration

Abstract

In almost all developed countries, people enjoy enriched lives due to urbanization. Historically, negative risks that accompany agglomeration, like epidemics, have not deterred urbanization. But the telecommuting that has spread in the wake of the COVID-19 pandemic may trigger the transformation of the urban structure in Japan. I offer an explanation of this phenomenon, showing that this transformation is inextricably interrelated to changes within a firm's organization. A fall in the cost of transportation and communication leads to a transformation of the equilibrium between urban and industrial structures.