Gig Jobs: stepping stones or dead ends?

Lena Hensvik

doi:10.1257/rct.2766-1.1

Abstract

How useful is work experience from the gig economy for labor market entrants searching for traditional wage jobs? We conducted a correspondence study in Sweden, comparing callback rates for recent high school graduates with (i) gig-experience, (ii) traditional experience, and (iii) unemployment history. We also study heterogeneous responses with respect to perceived foreign background. Our findings suggest that gig-experience is more valuable than unemployment, but less useful than traditional experience for majority applicants. Strikingly however, no form of labor market experience increases the callback rate for minority workers.

Highlights

In many countries, the labor market has become polarized, with marginal groups finding it increasingly difficult to find employment
We focus on young applicants since we are interested in the value of gig-job experience for labor market entrants
One of Sweden’s leading newspapers published the following quote from the Swedish Public Employment Services: The gig economy will help those who want a permanent position but who have difficulty finding one, for example young people without long experience and those newly arrived in Sweden

Summary

Introduction

The labor market has become polarized, with marginal groups finding it increasingly difficult to find employment. Low-skilled youth and migrants from refugee countries make up a large and increasing share of the unemployed (Forster et al, 2017). We compare the number of positive responses from employers for young applicants currently (i) employed by a well-known gig company; (ii) employed in a similar job in the traditional labor market; and (iii) in an ongoing unemployment spell lasting 7–15 months. We study the heterogeneous responses for applicants with Swedish vs Arabic-sounding names, since abundant evidence shows that the latter group experiences particular difficulties of finding jobs on the traditional labor market. One major reason is that transfers to the non-employed have increased at a slower rate than wages This means that there are strong incentives to find employment in Sweden, and that the consequences for failing to enter the labor market can be severe (Nordstrom Skans et al, 2017)

Methods

Results

Discussion

Conclusion