The Online Platform Economy in 27 Metro Areas: The Experience of Drivers and Lessors

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A significant and growing fraction of families generate income through the Online Platform Economy. In previous JPMorgan Chase Institute research we leveraged administrative banking records to track supply-side participation and revenues in the Online Platform Economy, and observed strong secular trends in the transportation and leasing sectors between 2013 and 2018. In this follow-up research, we use geographic and temporal variation to explore these dynamics in more detail, in order to get a better understanding of the viability of the transportation and leasing sectors of the Online Platform Economy as a potential source of income for participant families. We explore variation in characteristics of the Online Platform Economy over five years across 27 metropolitan areas. Our findings are fivefold. First, there is significant variation across metropolitan areas in terms of participation rates, average monthly revenues, and levels of engagement in the leasing and transportation sectors of the Online Platform Economy. Participation and revenues are positively correlated but there are telling exceptions to that pattern. Second, metropolitan areas with larger incumbent industries as the Online Platform Economy emerged ended up with higher participation and higher average revenues in the corresponding platform sectors. Third, in almost every metro area, average monthly revenue declined for drivers and rose for lessors between 2013 and 2018, fully accounting for the secular trends in driver and lessor revenues, even as participation shares shifted across metro areas. Fourth, in both sectors but especially in transportation, participation tends to increase the most in the months and places where average revenues are increasing the most. Fifth, at least 45 percent–and likely more–of the decline in average monthly driver revenues was accounted for by drivers participating more occasionally within the month. In the leasing sector, more frequent participation accounted for more than half of the rise in revenues. Taken together, our results suggest that there is still room for supply-side growth in both the transportation and leasing sectors of the Online Platform Economy. In metro areas with large potential markets for transportation and leasing services, these sectors of the Online Platform Economy are robust alternatives for families looking to generate income, though the opportunities they present are almost certainly changing as the Online Platform Economy matures.