The Impact of the Sharing Economy on Household Bankruptcy

Abstract

Powered by digital technologies, many peer-to-peer platforms, or what is called the sharing economy, have emerged in the past decade. While the impact of the sharing economy has re- ceived a great deal of attention in the past few years, extant research hasn’t fully documented the impact of the sharing economy on consumers, workers, industry, and society as a whole. In this study, we exploit the geographic and temporal variation in Uber’s entry to examine its impact on the personal bankruptcy rate as well as on other consumer credit default rates. We empirically document the changes in personal bankruptcy filings after Uber’s entry, and show that personal bankruptcy filings under Chapter 7 experience a drop of 0.047 per thousand people after Uber enters a county, which translates to a 3.26% reduction in quarterly bankruptcy filings. Uber’s entry also led to a reduction in Chapter 13 personal bankruptcy filings, but to a smaller degree (0.018 cases per thousand people per quarter). We check the validity of our estimates using business bankruptcy filings, which are found to be uncorrelated with Uber’s entry.

Keywords: Sharing Economy, Personal Bankruptcy, Household Finance

JEL Classification: D14, D62