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Can You Gig it? An Empirical Examination of the Gig-Economy and Entrepreneurial Activity

44 Pages Posted: 10 Mar 2016 Last revised: 3 Aug 2017

Gordon Burtch

University of Minnesota - Twin Cities - Carlson School of Management

Seth Carnahan

University of Michigan, Stephen M. Ross School of Business

Brad N. Greenwood

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: March 7, 2016

Abstract

We examine how the entry of gig-economy platforms influences local entrepreneurial activity. On one hand, such platforms may reduce entrepreneurial activity by offering stable employment for the un- and under-employed. On the other hand, such platforms may enable entrepreneurial activity by offering work flexibility that allows the entrepreneur to re-deploy resources strategically in order to pursue her nascent venture. To resolve this tension, we exploit a natural experiment, the entry of the ride-sharing platform Uber X and the on-demand delivery platform Postmates into local areas. We examine the effect of each on crowdfunding campaign launches at Kickstarter, the world’s largest reward-based crowdfunding platform. Results indicate a negative and significant effect on crowdfunding campaign launches, and thus local entrepreneurial activity, after entry of Uber X or Postmates. Strikingly, the effect appears to accrue primarily to unfunded and under-funded projects, suggesting that gig-economy platforms predominantly reduce lower quality entrepreneurial activity by offering viable employment for the un- and under-employed. We corroborate our findings with US Census data on self-employment, which indicate similar declines following the entry of Uber X, and with a small scale survey of gig-economy participants.

Keywords: gig economy, digital platforms, innovation, crowdfunding, entrepreneurship, difference in difference, natural experiment

Suggested Citation

Burtch, Gordon and Carnahan, Seth and Greenwood, Brad N., Can You Gig it? An Empirical Examination of the Gig-Economy and Entrepreneurial Activity (March 7, 2016). Ross School of Business Paper No. 1308. Available at SSRN: https://ssrn.com/abstract=2744352

Gordon Burtch

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Seth Carnahan

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Brad N. Greenwood (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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