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NOVAFRICA Seminar: “Uber vs Taxi: A Driver’s Eye View”

On Wednesday, March 29th, at 2.30pm, the NOVAFRICA Center welcomes Joshua Angrist, from MIT, to present his work.

Authors:
Joshua Angrist (MIT)

Abstract:
Ride-hailing drivers pay a proportion of their earnings to the platform operator, a compensation model increasingly used by internet-mediated service providers. To Uber drivers, this proportion is known as the Uber fee. By contrast, traditional taxi drivers in most US cities make a fixed payment independent of their earnings, usually a weekly or daily medallion lease, while keeping every dollar earned net of expenses. We assess these compensation models from a driver’s point of view using an experiment that offered random samples of Boston Uber drivers opportunities to lease a virtual taxi medallion that eliminates the Uber fee. Some drivers were offered a negative fee. The labor supply response to our offers reveals a large intertemporal substitution elasticity, on the order of 1.2. At the same time, our virtual lease program was under-subscribed: many drivers who would have benefitted by buying an inexpensive lease chose to opt out. We use these results to calibrate the driver surplus that ride-hailing creates relative to a traditional taxi compensation scheme. The results suggest ride-hailing drivers reap a large surplus from the opportunity to avoid medallion leasing.

Please find further information about this seminar here.

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