Digital leisure and the gig economy: a two-sector model of growth

TL;DR

This paper develops a two-sector growth model to analyze how digital leisure and gig economy dynamics influence overall economic growth and sectoral time allocation, highlighting the effects of productivity shocks.

Contribution

It introduces a novel two-sector model linking digital leisure and gig economy growth, examining how shocks impact sectoral growth and time distribution.

Findings

TFP shocks can shift work time between sectors

Elasticity of data production affects digital leisure time

Model explains growth dynamics in digitized economies

Abstract

The process of market digitization at the world level and the increasing and extended usage of digital devices reshaped the way consumers employ their leisure time, with the emergence of what can be called digital leisure. This new type of leisure produces data that firms can use, with no explicit cost paid by consumers. At the same time, the global digitalization process has allowed workers to allocate part of (or their whole) working time to the Gig Economy sector, which strongly relies on data as a production factor. In this paper, we develop a two-sector growth model to study how the above mechanism can shape the dynamics of growth, also assessing how shocks in either the traditional or the Gig Economy sector can modify the equilibrium of the overall economy. We find that shocks in the TFP can crowd out working time from a sector to the other, while shocks on the elasticity of production to data determines a change in the time allocated to digital leisure.