Digital labor platform under the boom and bust: Bank account data insights

Abstract

This study uses deidentified bank data from a Japanese megabank to analyze how the economic downturn affected labor supply in the platform economy. Specifically, we identify gig workers based on deposit information from food delivery platform services and examine changes in their labor supply before and after the pandemic. Individuals who take on food delivery gig work typically exhibit three characteristics: they are predominantly young, male, and have low liquidity. About 32 percent of these workers had liquidity below zero, excluding gig income, and 27 % had liquidity below 50,000 yen (approximately 335 USD), indicating that many face severe liquidity constraints. Additionally, liquidity tends to gradually decline in the months leading up to gig work. While there is an increased probability of entering the gig market, the likelihood of workers staying drops to 60–70 % in the first month, suggesting the gig market serves mainly as a temporary income-smoothing mechanism. Interestingly, the average liquidity balance in the first month for those who started gig work during the COVID-19 recession was higher than for those who began gig work during the pre-pandemic boom. In addition, the decline in liquidity before starting gig work was smaller during the COVID-19 recession compared to the pre-COVID boom. Although it was expected that participation during the downturn would be driven by those facing liquidity constraints, the data shows that even individuals with some financial leeway entered the gig market during recessions.