MSU researcher explores effects of the rise of the gig economy on workers

November 12, 2021 - Katie Nicpon

MSU Economics Associate Professor Emilie Jackson researches the gig economy and its effect on workers and society as a whole. A general definition of the gig economy is the economic sector consisting of part-time, temporary, and freelance jobs.

“In the context of my research, what we’re looking at are the new online gig platforms such as  Uber, Lift, TaskRabbit,” she said. “That type of platform that is connecting customers and workers.” 

Depending on the definition of gig economy, it could comprise up to 30% of the U.S. economy. Self-employment isn’t a new concept, but the rise of digital platforms that directly connect customers and workers and decrease barriers is a novelty. 

“It facilitates and makes it easier for workers to participate in this type of work and it introduces new types of work that didn’t fully exist before,” Jackson explained. 

Jackson’s most recent research involves how these new forms of work through gig platforms can offer people facing unemployment a form of work as a way of potentially smoothing their income. 

“The idea being that this type of work is easier to transition into compared to traditional forms of work,” she said. “So when someone loses their job, this may be a quick way of recovering lost earnings.” 

Her research involved two groups of people who had previously been employed, recently lost their jobs and were eligible for unemployment insurance: prime age adults, 25-54, and older adults, 55-69.

“At a high level what I find, if you look at prime age individuals, a subset of them turn to gig work and they’re better able to smooth their earnings,” she explained.”Their earnings still drop, but they drop by a smaller amount.” 

Jackson also studied older adults who turned to gig work after losing their employment.

“These types of workers have a more difficult time finding reemployment when they lose their jobs,” she said. “Empirically in the past, instead of returning to a traditional wage job, they have turned to either early retirement, withdrawing their retirement benefit early or turning to disability insurance. Becoming a gig worker is a benefit because they’re able to work longer than they otherwise would have.” 

As a result of her research, Jackson finds that the benefits of becoming a gig worker is the flexibility to work provided to prime age individuals and the ability to continue working for older individuals. However, she has also found some of the downsides to gig work for prime age individuals.

“There’s no job ladder,” she said. “You can’t get promoted, you can’t work up the job ladder. There’s no form of doing better. You might be able to figure out the best hours to work to get more money, but from a career development standpoint, if the counterfactual is that individuals would have been in a job that lets them grow their human capital, that’s a factor that’s missing.”

Her research shows that although gig work helps prime-age individuals smooth out their income in the short-term, individuals stay in gig work and their earnings lag behind their counterparts that return to traditional work. The next part of Jackson’s research will focus on whether they are simply getting stuck in this type of employment or if they’ve actively chosen to stay in this field because they value flexibility more than income. 

“What my research is going to be about going forward is disentangling what the welfare implications of this are,” she said.

Jackson performs research so that it can make a difference to our society. Her research has implications for policies and policy-makers. 

“There is a lot of policy debate, I just moved here from California where they were going back and forth with different propositions and voting as to whether or not independent contractors should be considered employees or not, so that is one active area of policy that is related to this,” she said. “But I think it’s more about understanding what is going on with these workers and in the scenario where these workers are getting stuck, it’s trying to figure out ways to help whether it’s providing job search resources or assistance to help individuals flow back to traditional work.”

In fact, the reason Jackson chose to study economics was the impact that she could have in the community.

“When I was choosing between computer science and economics, I was really thinking through the real world implications and having a policy application,” she said. “Economics provided a way to be more involved in policy and being able to have an impact on communities.” 

Through her academic career, the gig economy work is just one branch of Jackson’s research that began with her interest in healthcare. 

“Economics is just such a broad field so it’s really finding what it is that you’re passionate about and trying to think through, and obviously no policies are going to be perfect going into it, so it’s just trying to think what research can you provide or think through in terms of helping making things better or just helping when new things come around - like the gig economy for example, when that was a new phenomenon that came around - just helping policy-makers understand what’s going on to help them create policies in the first place.” 

According to Jackson, the gig economy won’t be going away any time soon. 

“I don’t think it’s going away, especially with COVID, there was an increase in workers turning to this and there was certainly an increase in demand - delivery demand was certainly very popular during COVID,” she said. 

From Jackson’s perspective, the future of the gig economy will be shaped by policy going forward.

“Really what it’s going to depend on going forward is evaluating the effects from policies such as those in California. How they affect whether or not these individuals have benefits such as retirement, healthcare and so forth,” she said. “But more importantly how that changes participation in such work. Right now, it’s still a small number of people who have ever done this, and most do so for short periods of time. But as a society, we’re beginning to ask those policy questions about benefits for these types of jobs and that might be something going forward that might need to be reevaluated from a policy standpoint.”

To read more about her research and publications, visit https://sites.google.com/view/jacksonemilie.