Shared Prosperity (or Lack Thereof) in the Sharing Economy

Information Systems Research, Forthcoming

59 Pages Posted: 30 May 2018 Last revised: 24 Sep 2021

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 regulations and providing access to underutilized inventory, Airbnb attracts visitors to outlets that are not traditional tourist destinations. Although visitors generally bring significant spending power, it is unclear whether visitors use Airbnb only primarily for lodging and thus do not contribute to the adjacent economy. To evaluate this, we focus on the impact of Airbnb on the restaurant employment growth across locales in New York City (NYC). Specifically, we focus on areas in NYC that did not attract a significant tourist volume prior to the emergence of 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 percentage point increase in the intensity of Airbnb activity (Airbnb reviews per household) leads to approximately 1.7% restaurant employment growth. Since home-sharing visitors are lodging in areas that are not accustomed to tourists, we also investigate the demographic and market-structure related heterogeneity of our results. 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 majority Black areas is not statistically significant. We validate the underlying mechanism behind the results by evaluating the impact of Airbnb on Yelp visitor reviews, revealing that areas with increased 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: Racial Disparity, Economic Growth, Digital Marketplaces, The Sharing Economy, Spillover Effects, Airbnb

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). Information Systems Research, Forthcoming, 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 California 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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