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Shared Prosperity (or Lack Thereof) in the Sharing Economy

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  • Mohammed Alyakoob

    (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Mohammad S. Rahman

    (Krannert School of Management, Purdue University, West Lafayette, Indiana 47907)

Abstract

This paper examines the potential economic spillover effects of a home-sharing platform—Airbnb—on the growth of a complimentary local service—restaurants. By circumventing traditional land-use regulations and providing access to underutilized inventory, Airbnb attracts visitors to locales that are not traditional tourist destinations. Although visitors generally bring significant spending power, it is unclear whether visitors use Airbnb primarily for lodging and thus do not contribute to the adjacent economy. To evaluate this, we focus on the impact of Airbnb on the restaurant employment growth across locales in New York City (NYC). Specifically, we focus on areas in NYC that did not attract a significant tourist volume prior to the emergence of a home-sharing service. Our results indicate a salient and economically significant positive spillover effect on restaurant job growth in an average NYC locality. A one-percentage-point increase in the intensity of Airbnb activity (Airbnb reviews per household) leads to approximately 1.7% restaurant employment growth. Since home-sharing visitors are lodging in areas that are not accustomed to tourists, we also investigate the demographic and market-structure-related heterogeneity of our results. Notably, restaurants in areas with a relatively high number of White residents disproportionately benefit from the economic spillover of Airbnb activity, whereas the impact in majority Black areas is not statistically significant. We validate the underlying mechanism behind the results by evaluating the impact of Airbnb on Yelp visitor reviews, revealing that areas with increased Airbnb activity experience a surge in their share of NYC visitor reviews. This result is further validated by evaluating the impact of a unique Airbnb neighborhood-level exogenous policy recently implemented in New Orleans.

Suggested Citation

  • Mohammed Alyakoob & Mohammad S. Rahman, 2022. "Shared Prosperity (or Lack Thereof) in the Sharing Economy," Information Systems Research, INFORMS, vol. 33(2), pages 638-658, June.
    • Handle: RePEc:inm:orisre:v:33:y:2022:i:2:p:638-658
    DOI: 10.1287/isre.2021.1076
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