Access to gig economy may spur small business creation, study finds

Access to the gig economy may help facilitate the creation of new businesses, according to a new study.

The gig (or short-term job) market is often more transitory than the traditional freelancing market. The flexibility and low barrier to entry of these jobs gives would-be entrepreneurs fallback opportunities that reduce their financial risk, argues Yael Hochberg, professor in entrepreneurship and finance at Rice University’s Jones Graduate School of Business .

Hochberg and her co-authors explored how the gig economy has “positive spillover effects” on entrepreneurial activity by studying ride-hailing platforms like Uber and Lyft. In their research, the team found a 7% to 12% increase in entrepreneurial interest after the arrival of ride-hailing platforms in a city, as measured via local Google searches.

“Having the option to access gig work in the event of failure or other unpredictable situations appears to have huge value in pushing entrepreneurs to accept the risks associated with starting a new business,” Hochberg said.

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