Regulating ride-sourcing markets: Can minimum wage regulation protect drivers without disrupting the market?
Farnoud Ghasemi, Arjan de Ruijter, Rafal Kucharski, Oded Cats
TL;DR
This study examines how minimum wage laws affect ride-sourcing drivers, travelers, and platforms, showing both benefits and trade-offs in market dynamics.
Contribution
A novel simulation framework to assess minimum wage regulation in ride-sourcing markets, including platform lockout strategies.
Findings
Minimum wage regulation increases driver income but raises fares and threatens platform survival.
Platform lockout strategies boost profitability and driver earnings but reduce jobs and service quality.
Regulation outcomes depend heavily on local market conditions and platform responses.
Abstract
Ride-sourcing platforms such as Uber and Lyft are prime examples of the gig economy, recruiting drivers as independent contractors, thereby avoiding legal and fiscal obligations. Although platforms offer flexibility in choosing work shifts and areas, many drivers experience low income and poor working conditions, leading to widespread strikes, protests and lawsuits against the platforms. In response, minimum wage regulation is adopted to improve drivers’ welfare. However, the impacts of this regulation on drivers as well as on travelers and platforms, remain largely unknown. While ride-sourcing platforms do not disclose the relevant data, state-of-the-art models fail to explain the effects of minimum wage regulation on market dynamics. In this study, we assess the effectiveness and implications of minimum wage regulation in ride-sourcing markets while simulating the detailed dynamics of…
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Taxonomy
TopicsDigital Economy and Work Transformation · Transportation and Mobility Innovations · Sharing Economy and Platforms