Unintended Effects of DEI Regulations on Female Workers – Evidence from Gig Economy

Abstract

The gig economy has become a significant part of the economy in the past decade. However, gig workers often suffer from unjust treatment due to the lack of legal protection. In response to progressive societal and cultural changes, several U.S. states have expanded legal protections against workplace harassment and discrimination to cover independent contractors, such as gig workers. This progressive legislative shift, however, has not been comprehensively studied for its impact. This study investigates the consequences of these diversity, equity, and inclusion (DEI) regulation reforms, focusing particularly on their implications for female workers in the gig economy. We propose that these reforms could unintentionally intensify intergroup anxiety – concerns and apprehensions individuals might experience regarding the potential for interactions with members of different social groups. The augmented ingroup favoritism and heightened intergroup anxiety might lead clients to be reluctant to hire female workers. Adopting an intersectionality perspective, we further investigate the impact on minority females. Using data from a leading online labor market spanning 2017-2020 and applying a difference-in-differences model, we find a significant decrease in earnings for female workers relative to male workers post-reform. Additionally, minority females have seen an even larger decrease than white females on average. Further analysis suggests that this decrease is more pronounced among females with lower education and experience levels. We also show that the negative impact on females is stronger in industries requiring more interpersonal interactions, and clients are less likely to hire females after the reform, which corroborates the theoretical mechanism. This study contributes to research investigating gig economy management and policies, DEI, and gender/racial bias literature and provides important implications for policymakers.

Keywords: Diversity, Equity, and Inclusion, Gender and Racial Bias, Intergroup Anxiety, Gig Economy, Regulation, Online Labor Market