The gig economy has become a significant force in the global labor market, with between 200 and 400 million workers worldwide participating in various app-based delivery services. In regions like Latin America, where unemployment and informal work are prevalent, these platforms offer new and flexible job opportunities for many individuals. However, the rise of gig work has raised concerns about its impact on traditional employment and worker protections.
Policymakers are grappling with the challenge of regulating the gig economy to maximize its benefits while safeguarding vulnerable workers. The lack of precise estimates on who benefits and who loses from these platforms has made designing effective policies a complex task. Are these services truly creating new opportunities for workers, or are they simply replacing secure, well-paying jobs with less stable and lower-wage positions?
In a recent job market paper, researcher Pascuel Plotkin delves into the effects of delivery apps on in-house restaurant employees and gig workers in Brazil. By combining data from a major delivery app with administrative employer-employee records, Plotkin provides a comprehensive analysis of how these platforms impact formal employment in the country.
One of the key findings of Plotkin’s research is that restaurants tend to replace in-house waiters with gig delivery workers when they adopt delivery platforms. This shift results in a 6% reduction in the in-house workforce, with waiters being the most affected. However, the data also shows that approximately 75% of displaced waiters are able to secure new roles in the formal sector within a year, limiting the overall earnings impact to a modest 1.5% loss.
Plotkin also explores the spillover effects of platform adoption on non-adopting restaurants. These establishments, located near restaurants that have adopted delivery services, experience downsizing and an increased likelihood of closure. Workers at non-adopting restaurants face a 6.6% decline in earnings, highlighting the broader impact of delivery apps on the industry.
When considering the overall impact on worker earnings, Plotkin’s research reveals that the net earnings increase for app-based drivers outweighs the income losses experienced by restaurant employees. The study shows that each adopting restaurant generates earnings equivalent to 4.6% of their pre-platform wage bill, driven primarily by gains for informal and unemployed workers with limited alternative job options.
Beyond earnings, Plotkin also examines non-wage aspects of gig work, such as job security and flexibility. His findings suggest that app-based jobs rank highly among restaurant jobs in Brazil, indicating that many workers value these positions beyond just their wages.
In terms of policy implications, Plotkin’s research underscores the need for policymakers to navigate the complex effects of gig work. While these platforms offer new earnings opportunities, they also bring challenges such as job displacement and increased competition. Regulatory efforts aimed at improving protections for app-based drivers while preserving job flexibility could help ensure that the growth of the gig economy supports long-term economic stability and worker welfare.
In conclusion, Plotkin’s study sheds light on the multifaceted impact of delivery apps on the labor market in Brazil. By providing a nuanced analysis of how these platforms affect both formal and informal workers, the research offers valuable insights for policymakers seeking to strike a balance between innovation and worker protection in the gig economy.
