Shared Prosperity (or Lack Thereof) in the Sharing Economy
54 Pages Posted: 30 May 2018
Date Written: May 17, 2019
This paper examines the heterogeneous 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 the visitors of a city to vicinities that are not traditional tourist destinations. Although visitors generally bring significant spending power, it is, however, not clear if the visitors use Airbnb primarily for lodging, thus, not contributing to the local economy. To evaluate this, we focus on the impact of Airbnb on the restaurant employment growth across vicinities in New York City (NYC). Our results indicate that if the intensity of Airbnb activity (Airbnb reviews per household) increases by 1%, the restaurant employment in an average area grows by approximately 1.03%. We also investigate the role of demographics and market concentration in driving the variation. Notably, restaurants in areas with a relatively high number of Black residents do not benefit from the economic spillover of Airbnb activity. Also, restaurant in more competitive areas reap the benefits from this spillover most. 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 policy recently implemented in New Orleans.
Keywords: The Sharing Economy, Employment Growth, Racial Disparity
JEL Classification: L53, L83, J15, J21
Suggested Citation: Suggested Citation