The Empowering and Competition Effects of the Platform-Based Sharing Economy on the Supply and Demand Sides of the Labor Market

Journal of Management Information Systems, Forthcoming.

62 Pages Posted: 12 Jan 2021

See all articles by Ziru Li

Ziru Li

Arizona State University; Thunderbird School of Global Management

Yili Hong

University of Houston - C.T. Bauer College of Business

Zhongju Zhang

Arizona State University, W. P. Carey School of Business

Date Written: October 25, 2020

Abstract

The sharing economy has fundamentally changed the way many individuals work. In this paper, we study the impact of the entry of a major ridesharing platform into US Metropolitan Statistical Areas (MSAs), on the supply and demand sides of the labor market. Leveraging the difference-in-differences (DID) research design and a data set combining multiple US Census archival sources, we exploit the variation in labor market metrics before and after Uber’s entry into the MSAs. Our empirical findings reveal that the introduction of the ridesharing platform has an empowering effect on workers (the supply side of the labor market) and a competition effect on traditional jobs (the demand side of the labor market). Specifically, Uber’s entry into the MSAs increases labor force participation, decreases the unemployment rate of residents living below the poverty level, and improves the employment and financial status of low-income workers. In addition, Uber’s entry reduces the employment number and increases wages of conventional low-skill and/or low-wage jobs. This paper provides empirical evidence of the impact of a digital sharing economy platform on the labor market and suggests that policymakers and platform operators should account for this broader impact when they devise policies and make strategic decisions.

Keywords: sharing economy, labor market, two-sided platforms, empowering effect, competition effect

Suggested Citation

Li, Ziru and Hong, Yili and Zhang, Zhongju, The Empowering and Competition Effects of the Platform-Based Sharing Economy on the Supply and Demand Sides of the Labor Market (October 25, 2020). Journal of Management Information Systems, Forthcoming., Available at SSRN: https://ssrn.com/abstract=3718770

Ziru Li

Arizona State University ( email )

400 E Van Buren St
Phoenix, AZ 85004
United States

Thunderbird School of Global Management

AZ
United States

Yili Hong (Contact Author)

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States

Zhongju Zhang

Arizona State University, W. P. Carey School of Business ( email )

400 E Lemon St
Tempe, AZ AZ 85287
United States

HOME PAGE: http://wpcarey.asu.edu/people/profile/2712702

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