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Uber vs. Taxi: A Driver’s Eye View

Author

Listed:
  • Joshua D. Angrist
  • Sydnee Caldwell
  • Jonathan V. Hall

Abstract

Ride-hailing drivers pay a proportion of their fares to the ride-hailing platform operator, a commission-based compensation model used by many internet-mediated service providers. To Uber drivers, this commission is known as the Uber fee. By contrast, traditional taxi drivers in most US cities make a fixed payment independent of their earnings, usually a weekly or daily medallion lease, but keep every fare dollar net of expenses. We assess these compensation models from a driver’s point of view using an experiment that offered random samples of Boston Uber drivers opportunities to lease a virtual taxi medallion that eliminates the Uber fee. Some drivers were offered a negative fee. Drivers’ labor supply response to our offers reveals a large intertemporal substitution elasticity, on the order of 1.2. At the same time, our virtual lease program was under-subscribed: many drivers who would have benefitted from buying an inexpensive lease chose to opt out. We use these results to compute the average compensation required to make drivers indifferent between ride-hailing and a traditional taxi compensation contract. The results suggest that ride-hailing drivers gain considerably from the opportunity to drive without leasing.

Suggested Citation

  • Joshua D. Angrist & Sydnee Caldwell & Jonathan V. Hall, 2017. "Uber vs. Taxi: A Driver’s Eye View," NBER Working Papers 23891, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23891
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    1. Uber vs. Taxi: A Driver’s Eye View
      by maximorossi in NEP-LTV blog on 2018-02-27 12:17:56

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    2. Etienne Lalé, 2019. "Search and Multiple Jobholding," Upjohn Working Papers 19-305, W.E. Upjohn Institute for Employment Research.
    3. Alexandre Mas & Amanda Pallais, 2020. "Alternative Work Arrangements," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 631-658, August.
    4. Georgina Santos, 2018. "Sustainability and Shared Mobility Models," Sustainability, MDPI, vol. 10(9), pages 1-13, September.
    5. Alexandre Mas & Amanda Pallais, 2019. "Labor Supply and the Value of Non-work Time: Experimental Estimates from the Field," American Economic Review: Insights, American Economic Association, vol. 1(1), pages 111-126, June.
    6. Cody Cook & Rebecca Diamond & Jonathan V Hall & John A List & Paul Oyer, 2021. "The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers [Measuring the Gig Economy: Current Knowledge and Open Issues]," Review of Economic Studies, Oxford University Press, vol. 88(5), pages 2210-2238.
    7. Tang, Johnny Jiahao, 2020. "Individual heterogeneity and cultural attitudes in credence goods provision," European Economic Review, Elsevier, vol. 126(C).
    8. Joshua D. Gottlieb & Avi Zenilman, 2020. "When Nurses Travel: Labor Supply Elasticity During COVID-19 Surges," Working Papers 2020-166, Becker Friedman Institute for Research In Economics.
    9. Sun, Hao & Wang, Hai & Wan, Zhixi, 2019. "Model and analysis of labor supply for ride-sharing platforms in the presence of sample self-selection and endogeneity," Transportation Research Part B: Methodological, Elsevier, vol. 125(C), pages 76-93.
    10. Joshua D. Gottlieb & Avi Zenilman, 2020. "When Workers Travel: Nursing Supply During COVID-19 Surges," NBER Working Papers 28240, National Bureau of Economic Research, Inc.
    11. Yang Pan & LiangFei Qiu, 2018. "Is Uber Helping or Hurting Mass Transit? An Empirical Investigation," Working Papers 18-11, NET Institute.
    12. Kuan-Ming Chen & Ning Ding & John A. List & Magne Mogstad, 2020. "Reservation Wages and Workers’ Valuation of Job Flexibility: Evidence from a Natural Field Experiment," Working Papers 2020-124, Becker Friedman Institute for Research In Economics.
    13. Zhang, Kenan & Nie, Yu (Marco), 2021. "To pool or not to pool: Equilibrium, pricing and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 151(C), pages 59-90.
    14. Wang, Hai & Yang, Hai, 2019. "Ridesourcing systems: A framework and review," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 122-155.
    15. Kuan-Ming Chen & Min Ding & John List & Magne Mogstad, 2020. "Reservation Wages and Workers' Valuation of Job Flexibility: Evidence from a Natural Field Experiment," Natural Field Experiments 00715, The Field Experiments Website.
    16. Chiwei Yan & Helin Zhu & Nikita Korolko & Dawn Woodard, 2020. "Dynamic pricing and matching in ride‐hailing platforms," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(8), pages 705-724, December.
    17. Zhang, Kenan & Nie, Yu (Marco), 2022. "Mitigating traffic congestion induced by transportation network companies: A policy analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 159(C), pages 96-118.
    18. Alisa Tazhitdinova, 2022. "Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 14(1), pages 473-500, February.
    19. Filippo Belloc, 2019. "Why Isn't Uber Worker-Managed? A Model of Digital Platform Cooperatives," CESifo Working Paper Series 7708, CESifo.
    20. Ngo, Nicole S. & Götschi, Thomas & Clark, Benjamin Y., 2021. "The effects of ride-hailing services on bus ridership in a medium-sized urban area using micro-level data: Evidence from the Lane Transit District," Transport Policy, Elsevier, vol. 105(C), pages 44-53.
    21. Alessandro Saia, 2022. "Trouble Underground: Demand Shocks and the Labor Supply Behavior of New York City Taxi Drivers," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(1), pages 1-27, March.
    22. Belloc, Filippo, 2019. "Effort under alternative pay contracts in the ride-sharing industry," MPRA Paper 95179, University Library of Munich, Germany.
    23. Dong, Tingting & Xu, Zhengtian & Luo, Qi & Yin, Yafeng & Wang, Jian & Ye, Jieping, 2021. "Optimal contract design for ride-sourcing services under dual sourcing," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 289-313.
    24. John Horton, 2021. "The Ruble Collapse in an Online Marketplace: Some Lessons for Market Designers," Papers 2104.06170, arXiv.org.
    25. Tazhitdinova, Alisa, 2020. "Do only tax incentives matter? Labor supply and demand responses to an unusually large and salient tax break," Journal of Public Economics, Elsevier, vol. 184(C).

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    More about this item

    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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