The Impact of Ride-Hailing Technology on Consumer Wages

Abstract

Although Uber’s ride-hailing technology has profoundly disrupted the transportation industry, its impact on the labor market is not yet clear. In theory, we expect the increased mobility brought by ride-hailing services to allow workers to access a wider radius of job opportunities and potentially higher paying positions. To test this hypothesis, I employ a difference-in-differences design to estimate the impact of Uber on consumer welfare, measured through occupational wages. Using data on Uber’s market entry in 275 MSAs in the U.S. and occupational wage data from the U.S. Bureau of Labor Statistics (BLS), I find that Uber market entry has a small, but statistically significant positive impact on wages for high earning occupations (90th percentile) and no significant effect on wages for middle (50th percentile) and low (10th percentile) earning occupations. I postulate that Uber disproportionately benefits individuals in high-earning occupations because they are more likely to afford Uber’s ride-hailing services. Those who can afford the service will gain convenience, time efficiency, and productivity benefits that ultimately result in a higher income, a finding that suggests Uber exacerbates existing income inequalities in the short-term.