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Riders on the storm

Author

Listed:
  • Juan Dolado

    (Universidad Carlos III de Madrid)

  • Alvaro Janez

    (Stockholm School of Economics)

  • Felix Wellschmied

    (Universidad Carlos III de Madrid)

Abstract

Online food delivery platforms typically operate through a controversial business model that relies on subcontracting self-employed workers, known as riders. Using a search and matching model, we quantify the labor-market effects of the Spanish Riders’ Law in 2021 that establishes the presumption of dependent employment for riders. Riders with heterogeneous preferences for leisure trade off work flexibility and easier employability as self-employed against enjoying higher wages as employees. Our main finding is that the reform succeeded in increasing the share of employees but failed to fully absorb the large outflows from self-employment and decreased riders’ wages, resulting in welfare losses. However, complementing the reform with a payroll tax cut for platforms hiring employees preserves employment levels and increases substantially riders’ welfare.

Suggested Citation

  • Juan Dolado & Alvaro Janez & Felix Wellschmied, 2025. "Riders on the storm," RFBerlin Discussion Paper Series 2527, Rockwool Foundation Berlin (RF Berlin).
    • Handle: RePEc:crm:wpaper:2527
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    References listed on IDEAS

    as
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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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