Financing in the GIg Economy

Gregory Buchak, Joint Program in Financial Economics PhD student

This paper studies how the entry of gig economy / ride-sharing aps like Uber and Lyft have impacted the size and utilization rate of the capital stock, and how the provision of credit to would-be drivers has been a necessary ingredient in bringing about these changes. Gig economy technologies like Uber make it possible for households to use their durable goods to provide valuable capital services on demand. This paper shows that upon gig economy entry, there is a significant shift in the ownership and utilization rates of capital as lower-income households acquire cars to become drivers. This reallocation is effected by---and in large part relies on---the ability of households to finance vehicle acquisitions, showing the importance of household finance in the gig economy. It goes on to study counterfactually the impact of reduced financial access on the size and composition of the gig-economy labor force.

Financing in the Gig Economy, The Journal of Finance, Volume79, Issue1, February 2024, Pages 219-256.