The Gig Economy, Smart Contracts, and Disruption of Traditional Work Arrangements

Abstract

The rapid growth of technology is not only creating innovative goods and services, but it is also fundamentally altering the workplace and the traditional understanding of employee and employer relationships. This can be seen today with the rise of the gig economy and alternative work arrangements. Our paper seeks to explain how technology has reduced the cost of transacting with the market and lowering monitoring costs, and thereby driving the expansion of contracting, as seen in the rise of the gig economy. We then anticipate blockchain technology and smart contracts will further reduce transaction costs and continue to alter the employee-employer relationships, leading to more decentralized work that mirrors the fundamentals of "contract at-will" employment. This will have significant implications for labor law because the standard labor regulations surrounding health and retirements benefits to employees will lose relevance as the employee-employer relationship dissipates. We suggest that reforms to labor laws should move in the direction of portable-benefits solutions.

Keywords: gig economy, smart contracts, blockchain