Shared Prosperity (or Lack Thereof) in the Sharing Economy

53 Pages Posted: 30 May 2018 Last revised: 9 Oct 2019

See all articles by Mohammed Alyakoob

Mohammed Alyakoob

University of Southern California - Marshall School of Business

Mohammad Saifur Rahman

Purdue University - Krannert School of Management

Date Written: May 17, 2019

Abstract

This paper examines the potential economic spillover effects of a home sharing platform---Airbnb---on the growth of a complimentary local service---restaurants. By circumventing traditional land-use regulation and providing access to underutilized inventory, Airbnb is attracting visitors of a city to vicinities that are not traditional tourist destinations. The novel nature of the home-sharing offering means that visitors are lodging in areas that are not accustomed to tourists and, as such, may not have the underlying infrastructure to fully benefit from their visits. Although visitors generally bring significant spending power, it is ambiguous whether or not the visitors use Airbnb primarily for lodging, thus, not contributing to the adjacent vicinity economy. To evaluate this, we focus on the impact of Airbnb on the restaurant employment growth across vicinities in New York City (NYC). Specifically, we focus on areas in NYC that did not attract a significant tourist volume prior to the home-sharing service. Our results indicate a salient and economically significant positive spillover effect on restaurant job growth in an average NYC locality. A 1% increase in the intensity of Airbnb activity (Airbnb reviews per household) leads to approximately 1.7% restaurant employment growth. We also investigate the role of demographics and market concentration in driving the variation. Notably, restaurants in areas with a relatively high number of White residents disproportionately benefit from the economic spillover of Airbnb activity whereas the impact in their black counterparts is not statistically significant. We validate the underlying mechanism behind the main result by evaluating the impact of Airbnb on Yelp visitor reviews -- areas with increasing Airbnb activity experience a surge in their share of NYC visitor reviews. This result is further validated by evaluating the impact of a unique Airbnb neighborhood level exogenous policy recently implemented in New Orleans.

Keywords: The Sharing Economy, Employment Growth, Racial Disparity

JEL Classification: L53, L83, J15, J21

Suggested Citation

Alyakoob, Mohammed and Rahman, Mohammad Saifur, Shared Prosperity (or Lack Thereof) in the Sharing Economy (May 17, 2019). Available at SSRN: https://ssrn.com/abstract=3180278 or http://dx.doi.org/10.2139/ssrn.3180278

Mohammed Alyakoob (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Mohammad Saifur Rahman

Purdue University - Krannert School of Management ( email )

403 W. State St
West Lafayette, IN 47907
United States
765-494-4464 (Phone)

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