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Riders on the Storm

Author

Listed:
  • Dolado, Juan J.

    (Universidad Carlos III de Madrid)

  • Jáñez, Álvaro

    (Stockholm School of Economics)

  • Wellschmied, Felix

    (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. We quantify the labor-market effects of the Spanish Riders' Law in 2021 that established the presumption of dependent employment for riders using a search and matching model. 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 led to a higher share of employees but failed to fully absorb the large flows of workers transiting out of self-employment and decreased riders' wages leading to welfare losses. However, complementing the reform with a payroll tax cut for platforms hiring employees preserves employment levels and increases riders' welfare.

Suggested Citation

  • Dolado, Juan J. & Jáñez, Álvaro & Wellschmied, Felix, 2025. "Riders on the Storm," IZA Discussion Papers 17740, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17740
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    Keywords

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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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