Worker Welfare in the Gig Economy
Around the world, the last decade has seen rapid growth in the prevalence of individuals earning income from digital platforms that mediate work for the solo self-employed—gig work. Concerns that these work arrangements undermine labor protections have motivated regulatory legislation. But policymakers suffer from a lack of evidence that quantifies the benefits of gig work and how prospective policies affect worker welfare. I use unique administrative data, which spans the UK’s food delivery market, to estimate worker surplus in this typical gig labor market. Evidence that workers learn about their own value of gig work over time, which a new survey corroborates, allows for the identification of the joint distribution of gig work valuations and outside options. Structural estimates imply a median monthly surplus for a gig worker equal to one third of the median employee's monthly income, and an aggregate annual welfare gain of £15bn from a labor market that was nascent a decade ago. Policymakers face a steep trade-off between ensuring benefits for full-time gig workers and maintaining gig work's appeal to low-hours participants, who enjoy most of the aggregate surplus. A counterfactual policy evaluation, which is calibrated to match aspects of California’s Proposition 22, supports this conclusion.

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Working papers

Refinancing Cross-Subsidies in the Mortgage Market (with Alessandro Gavazza, Lu Liu, Tarun Ramadorai, Jagdish Tripathy), July 2022.
In household finance markets, inactive households can implicitly cross-subsidize active households who promptly respond to financial incentives. We assess the magnitude and distribution of cross-subsidies in the mortgage market. To do so, we build a model of household mortgage refinancing and structurally estimate it on rich administrative data on the stock of outstanding UK mortgages in June 2015. We estimate sizeable cross-subsidies during this sample period, from relatively poorer households and those located in less-wealthy areas towards richer households and those located in wealthier areas. Our work highlights how the design of household finance markets can contribute to wealth inequality. Estimated cross-subsidies may differ in more recent periods given changes in the UK mortgage market since 2015.

The Cost of Labor Supply Biases (draft available on request)
This paper investigates an important dimension of the typical flexibility versus security trade-off that is used to frame self-employment, namely, behavioral frictions in exploiting flexibility. I study the welfare cost of behavioral biases in intensive margin labor supply decisions for a group of self-employed workers who are free to pick their hours. In response to salient wage variation, workers’ behavior implies a large and positive daily Frisch elasticity of 0.80 (s.e. 0.10). But in response to more common wage fluctuations their labor supply function is downward sloping for a range of wages, which is incompatible with even the most unrestrictive models of labor supply. In the spirit of Chetty-Looney-Kroft (2009), I use the salient Frisch elasticity to characterize preferences, and contrast outcomes under observed and optimal labor supply. A new sufficient statistics formula translates these deviations into daily welfare losses, which are economically significant. Point estimates range from two to five percent of income. Annually this can imply welfare losses of over £1,000.   

Placement Officer
Mark Schankerman

Supervisors/Advisors
Johannes Spinnewijn
John Van Reenen

References
Johannes Spinnewijn
John Van Reenen
Alessandro Gavazza
Alan Manning

Email
j.w.fisher@lse.ac.uk

Office Address
Department of Economics
London School of Economics and Political Science
Houghton Street, London WC2A 2AE