Working Paper: NBER ID: w30883
Authors: Jonathan V. Hall; John J. Horton; Daniel T. Knoepfle
Abstract: Following Uber-initiated fare increases, drivers make more money per trip and, initially, more per hour-worked. Drivers begin to work more hours. However, this increase in hours-worked—combined with a reduction in demand from a higher fare—has a business stealing effect, with drivers spending a smaller fraction of working hours transporting passengers. This market adjustment brings the hourly earnings rate back to about the rate that prevailed before the fare increase, in roughly two months. Passengers are partially compensated for higher prices by shorter wait times, but during the period covered by our data, fare increases likely reduced passenger welfare.
Keywords: ridesharing; market equilibrium; fare changes; driver earnings; passenger welfare
JEL Codes: J01; R41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 10% fare increase (R48) | increase in drivers' hourly earnings (J31) |
| 10% fare increase (R48) | decrease in driver utilization (J29) |
| decrease in driver utilization (J29) | decrease in drivers' hourly earnings (J31) |
| 10% fare increase (R48) | decrease in total hours of transportation (R41) |
| 10% fare increase (R48) | decrease in completed trips (R41) |
| 10% fare increase (R48) | reduction in wait times (C41) |