Real Effects of Peer-to-Peer Rental: Evidence from Airbnb

Abstract

We study how a pioneer of peer-to-peer rental, Airbnb, affects the local economy. Using venture capital infusions as plausibly exogenous shocks to Airbnb’s expansion into a new county, we find that Airbnb expansion leads to poorer hotel performance in the local county. Meanwhile, Airbnb expansion appears to increase local employment and household income. Further analysis suggests that increased employment is concentrated in industries that are complementary to Airbnb’s business and in employee groups with a lower level of skills. Our study highlights the impact of peer-to-peer rental marketplaces on the local economy and provides important policy implications.

Keywords: airbnb, sharing economy, hotel performance, unemployment, household income

JEL Classification: G22, G29, D31, J21