Can You Gig It? An Empirical Examination of the Gig-Economy and Entrepreneurship

Abstract

We examine how the entry of gig-economy platforms influences local entrepreneurial activity. On one hand, such platforms may reduce entrepreneurial activity by offering a stable employment for the un- and under-employed. On the other hand, such platforms may enable entrepreneurship by offering work flexibility that allows the entrepreneur to re- deploy resources strategically in order to pursue her nascent venture. To resolve this tension we exploit a set of natural experiments, the entry of the ride-sharing platform Uber X and the on-demand delivery platform Postmates. We examine the effect of each on crowdfunding campaign launches at Kickstarter, the world’s largest reward-based crowdfunding platform. Results indicate a significant negative effect on crowdfunding campaign launches, and thus local entrepreneurship, after platform entry. Strikingly, the effect appears to accrue primarily to un-funded and under-funded projects, suggesting that gig-economy platforms predominantly reduce necessity- based entrepreneurship by offering viable employment for the un- and under- employed. Finally, our results point to an associated increase in overall employment, suggesting the existence of significant economic spillovers that result from the influx of excess capital created by the platform.