The Impact of Economic and Behavioral Drivers on Gig Economy Workers: Structural Estimation Approach

Gad Allon, Operations, Information and Decisions, The Wharton School

Abstract: The topic of the gig economy has received considerable attention recently. Once a small minority of low-skilled workers with relatively low income, the gig economy now attracts high-skilled workers who are opting to join a flexible workforce. Companies greatly benefit from increased labor flexibility as they can hire workers with different skill levels to work at different times while paying them only for the work they perform. Although the core of the gig economy’s success lies in the perfect match between demand and supply, companies need to ensure that their services appeal not only to customers (demand) but also to service providers (supply). This poses an enormous challenge in planning and committing to a service capacity, during both peak hours (when demand is high), and off-peak times when only a handful of workers are needed. How can firms recruit the right number of on-demand workers at the right time? To address these questions, it is essential first to understand: How do gig workers make working decisions?