The gig economy and household financial vulnerability

Using a combination of manually collected data and the China Household Finance Survey from 2011 to 2019, we explore the effect of the gig economy on household financial vulnerability. To address endogeneity issues, we exploit the spatial and temporal variation in the presence of ride-hailing and food delivery services across Chinese cities. Employing a staggered difference-in-difference (DID) strategy, we find that the entry of gig platforms into a city is associated with a 5.97 % reduction in household financial vulnerability. This effect is more pronounced among households with lower wealth levels, lower female employment ratios, lower educational levels, as well as among households in poorer regions and areas with higher unemployment rates. To shed light on the mechanisms, we provide evidence that the entry of gig platforms provides households with additional income sources, reduces their liquidity constraints, and improves entrepreneurial quality. Our study contributes to the literature by highlighting the potential of the gig economy to serve as a buffer against financial instability, particularly for vulnerable populations.