Is the online gig economy beyond national reach? A European analysis

Abstract

With the emergence of the online gig economy, computer-based jobs can be completed by gig workers around the world. This raises the question whether the labour market for online gigs is truly boundless as distance no longer matters. Based on gravity models, we investigate the effect of geographical, institutional and cultural distance on almost 30 000 platform hirings between 26 European countries. While we find that online gig platforms are used to off-shore work from high- to low-wage countries, the online gig economy is not boundless as gig workers are still preferably hired from geographically close economies. A common language furthermore facilitates hirings between countries. Interestingly, though, differences in formal and informal institutions hardly affect hiring patterns across countries, suggesting that online platforms create their own institutional framework. We conclude that the online gig economy constitutes neither a boundless nor a frictionless labour market, implying that its promise of creating equal access to job opportunities is exaggerated.