Riders on the Storm

Juan J. Dolado (), Álvaro Jáñez and Felix Wellschmied
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Juan J. Dolado: Universidad Carlos III de Madrid
Álvaro Jáñez: Stockholm School of Economics

No 17740, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Online food delivery platforms typically operate through a controversial business model that relies on subcontracting self-employed workers, known as riders. We quantify the labor-market effects of the Spanish Riders' Law in 2021 that established the presumption of dependent employment for riders using a search and matching model. Riders with heterogeneous preferences for leisure trade off work flexibility and easier employability as self-employed against enjoying higher wages as employees. Our main finding is that the reform led to a higher share of employees but failed to fully absorb the large flows of workers transiting out of self-employment and decreased riders' wages leading to welfare losses. However, complementing the reform with a payroll tax cut for platforms hiring employees preserves employment levels and increases riders' welfare.

Keywords: riders; food delivery platforms; self-employed; employees (search for similar items in EconPapers)
JEL-codes: J21 J60 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2025-02
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