Gig Rules: The Political Economy of Labor Market Regulations | WIP Seminar with Hong Luo

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Abstract | As online platforms increasingly match workers to tasks, governments face the challenge of regulating gig work in a manner that balances flexibility and the protections of traditional employment. We study these trade-offs by measuring the welfare effects of a wide range of hypothetical job designs in the U.S. ride-sharing industry. We use conjoint survey experiments to elicit the preferences of current drivers, prospective drivers, and likely voters. We show that current drivers value paid time off, wage certainty, and health insurance while workers’ compensation and unemployment insurance are less important. Moderate restrictions on flexibility and autonomy are tolerated, but rigid constraints such as eight-hour shifts and 40-hour work weeks generate large losses in driver wellbeing. The preferences of prospective drivers and voters substantially overlap but vary in interesting ways from those who currently work in the industry. Our estimates identify many work arrangements that promise to raise firm profits without reducing driver welfare. Moreover, a substantial number of novel work designs would also attract a larger number of prospective drivers. Because voter preferences are strongly correlated with those of the drivers, many profitable job designs are also popular politically. At the same time, political acceptance is no guarantee for welfare gains. Some policies that receive majority support reduce driver welfare.

Hong Luo is an Associate Professor working on issues related to firms’ innovation incentives, their strategies in the market for innovative ideas, and managing intellectual property rights. An integral part of her research concerns the impacts of legal regimes and public policies – in particular, tort liability systems and intellectual property regimes – on firms’ innovation activities. She teaches Strategy at the Rotman school, serves as the Academic Director of the Centre for Entrepreneurship in the Faculty of Arts & Science at the University of Toronto, and is an Associate Editor at Management Science.