An Empirical Analysis of the Impacts of the Sharing Economy Platforms on the U.S. Labor Market

Abstract

Each generation of digital innovation has caused a dramatic change in the way people work. Sharing economy is the latest trend of digital innovation, and it has fundamentally changed the traditional business models. In this paper, we empirically examine the impacts of the sharing economy platforms (specifically, Uber) on the labor market in terms of labor force participation, unemployment rate, supply, and wage of low-skilled workers. Combining a data set of Uber entry time and several microdata sets, we utilize a difference-in-differences (DID) method to investigate whether the above measures before and after Uber entry are significantly different across the U.S. metropolitan areas. Our empirical findings show that sharing economy platforms such as Uber significantly decrease the unemployment rate and increase the labor force participation. We also find evidence of a shift in the supply of low skill workers and consequently a higher wage rate for such workers in the traditional industries.