is the most distinguished economist and i see there are many of you coming to listen to his lecture many people are following this lecture also from other halls we're all very eager to listen to this presentation we all know what the sharing economy is is part of this platform economy that has been brought about by the digitalization of services platform economies that have amazon facebook google and part of this economy which is based on digital platforms has enabled us to share things to show things that we might not use 100 percent such as airbnb for example is the case that we're all familiar with and uh we all familiar with and we use it as well so much so that we can for example rent a part of our house or a house or the house that we only use partially blah blah car such as lyft is something that enables you to drive somebody who can share the cost of the drive so sharing economy is something that is very easily found in transport it's very part and parcel of our contemporary culture in the 21st century much better so in the 20th century in the 20th century ownership was um something that was very much a sought after so nobody was very willing to share so if somebody was asked to um host somebody that would have been something that would have made your property rights less exclusive but now this stage is over thanks to this digital platform we can use such extra capacity having uh information also on the ranking on the reputation of the people that are being hosted and the people that play host to other people so the sharing economy is very interesting in that it generates jobs or perhaps work that can produce income that can add to additional um jobs uber for example is very successful as is that scrub it in the us that's grab it um was funded by somebody who meant to share her babysitter and then it um started sharing other parts of um and this platform is now being developing also in italy uh nyamo for example in italy is an italian app something that has been founded in italy so as to share dinner so for example you can prepare some food and uh invite somebody over so as to get some money and share whatever you have prepared and there are many such examples of sharing uh that has been made available thanks to digitalization professor krueger is now going to hold a lecture on the um sharing economy and uh i believe that he's also referring to the digitization and the platform the digital platform transforming labour market creating new forms new shapes of labor and creating new opportunities to find jobs professor kruger as one of the most distinguished economists he is one of the top 50 economists worldwide so he's greatly influential he can boast a quite uh um pastor he is a professor of economics and public affairs at princeton university where he has founded the princeton university survey research center this is very interesting as i was saying because one of the main features of professor kruger is an economist is that based on what i've read about based on his publication he's not an economist that just uses his magnifying lens as an economist studying models so he's also studying the real life so much so that he has studied some mechanisms and formula to put together surveys and to distinguish current phenomena at best he's also i had public posts he was the and the secretary in 2010 29 2010 and it was an assistant to secretary for the economic policy and chief economist of the us department of the treasury he was also chief economist at the u.s department of labor during the clinton administration he is also the author of most interesting books and focused on labor but another focus of his is the relationship between training education vocational training and work i believe that his recent book was written on terrorism on the economic basis of terrorism usually we believe that terrorists come from uh the outcasts but as a matter of fact the terrorists are proven here to be uh people with an education and with sound families so the subject matter of his research are very much connected to the work to the world of labor distribution of wealth and education these are perhaps the most important focuses of his research research on the structure of salaries and wages on the impact of minimum wage on employment apparently there's a close relationship between minimum wage and employment and the research were carried out in the different u.s states with a different minimum wages proving that employment whether employment was created when the minimum wage was higher he also started the impact of computer and the structure of wage and he also studied the quality of education in school as a function of the wage and with a specific study on how research in the real things indeed he studied for example the size of classes and the impact of that on the quality of education and it's also carried out other research symmetrical to this major idea uh on the rock economy on pop music a most recent study that is probably yet unpublished the latest version dating back to april 2025 takes us straight to our subject matter today indeed he analyzed the um atypical jobs as we might term them in italy alternative work arrangements as they are defined in the u.s between 1995 and 2015 in this research project many things emerged among other things the typical contractors returned them grew by 50 percent in this time lag so they used to be 10 uh and they grew to um something more than 15 this means that all the increase in jobs that were created between 2005 and 2015 some nine million units it was due to such a typical contract and there's a survey we learned through the platform economy so i'm sure that he has a lot to share with us with reference to this subject i'd like to thank professor kruger for being um with us and like to thank you for listening and having such a serving sentiment i'd like to give the floor a straight to professor krueger thank you grazie marco that's all the italian all use uh thank you very much for your kind introduction and i particularly appreciate that you mentioned uh the princeton survey research center because some of the work i'll talk about today is a product of the research that i've done together with my good friend larry katz from harvard working with the princeton survey research center i also want to thank uh trento for hosting this festival i think this is the fourth or fifth time i've come and there's really nothing like it in the world where such a distinguished group of economists and other social scientists come and discuss their research to a community that is genuinely interested in learning what researchers are finding what i'm going to discuss as marco mentioned is often called the sharing economy and i'm particularly interested in the nature of work in the sharing economy sharing economy is not a term i particularly like it sounds a little bit benevolent and um if one could be cynical and say it's really no different than the rest of the economy and you know if you think about it in economics we like to think there are gains from trade so really anything that takes place in the economy is involved some aspect of sharing but what i'm going to focus on are various applications or web platforms internet platforms where people provide labor services through the web they somehow use the internet to provide labor services it could be to find customers like uber drivers use uber to find customers and uber has many followers and competitors such as lyft or grab taxi dd in china could be services such as taskrabbit as marco mentioned where you can hire someone to babysit for your children or fix a broken fence in your backyard it could be grubhub a grub hub is a service which delivers food from a restaurant right to your doorstep and there are many uh other types of services that are cropping up on on the web this goes by a variety of different names sometimes it's called the on-demand economy because you just take out your smartphone and you demand the car and it arrives that's a term i don't like either because you might as well think of it as the on-supply economy since the workers get to choose whether they want to supply their labor on a particular day and one of the points i'm going to emphasize is that one way in which the sharing economy differs from the rest of the labor market is that workers have a tremendous amount of discretion to choose when to work whether whether to work or where to work sometimes it's called the 1099 economy that's the tax form that independent contractors receive uh in the us um so i'm going to call it the gig economy gig jobs what does that mean well musicians used to talk about performing gigs they would get hired uh to perform at a party or at a bar uh then they would go from one gig to the next from one short job to the next uh that's the term that i tend to use i don't know if that translates to italian but i'll call it the gig economy and uber the ride-sharing platform is the quintessential employer of good gig work in the u.s so let me just summarize uh what i'll show you in more detail perhaps two-thirds of all of the work that's being supplied in the online economy or gig economy in the u.s is through uber yet when you and uber's been growing remarkably quickly as i'll show you but only about half a percent of all workers in the u.s are currently providing labor through the gig economy through some online platform and many of them are doing it on a part-time basis offline gig work finding small jobs not using a web intermediary like taskrabbit or uber is actually more common than using an online intermediary but the online intermediaries are growing very quickly and will probably overtake the offline gig work pretty soon but was as mentioned we are seeing a very quick rise in non-traditional work in the u.s by non-traditional i mean people who are supplying labor but they're not traditional employees they're not covered by the legal protections that regular employees would receive they don't get the benefits that regular employees would receive examples are independent contractors or freelancers or independent consultants they're all 1099 workers we've also had a very rapid rise in contract work now contract work contract workers are traditional employees but in a non-traditional way what do i mean by that contract work means that one company is contracting out workers to work for another company and this was particularly common for janitorial services or security guards warehouse workers and it's now spreading to white collar occupations such as payroll processing and legal services maybe someday it will also affect economists and that's the backdrop for what we're seeing in the rise of the sharing economy and it's one of the reasons why people are very concerned about this rapidly growing segment given that most of the job growth that we've seen in the us has been in this non-traditional alternative work sector over the last decade now europe is lagging behind in the sharing economy and i think that this will have an adverse effect on productivity growth and on the quality of services could also affect for example the tourism industry if it's not possible to hire a uber driver lyft driver as soon as someone lands in a new city in a new country but it also does protect existing workers and existing businesses i'm going to propose that we extend the social compact to the workers in this emerging sector and that we tailor the social compact in a way that's appropriate for workers who have the authority to choose when they work and whether they work and i think that could lead to a more efficient and a more fair outcome so that's where i'll conclude so as i mentioned as a backdrop this is what's been taking place in the u.s labor market this is from a survey that larry katz and i conducted at the end of last year where we implemented the same survey that the bureau of labor statistics conducts but hasn't been able to conduct for la for the last decade asking workers about their work relationship are they independent contractors or consultants or freelancers those are the yellow bars and i should point out larry and i didn't make this graph we took it from the wall street journal which made a much better graph from our paper than we made ourselves and you can see that independent contractors went from about six and a half percent of the workforce up to eight percent of the workforce over the last 20 years and it's a pretty steady increase interestingly we don't pick this up in a lot of other bureau of labor statistics data for example those workers are all self-employed yet according to the bls data self-employment has been declining according to the irs data self-employment's been rising and i think the bureau of labor statistics is missing a lot of workers who are self-employed i think they're reporting themselves as employees and in this survey which is more specific and asks specifically are you working as an independent contractor freelancer independent consultant for your main job uh we see this rise and i put in here or the wall street journal put in here uh workers in the gig economy that's the half a percent shaded in at the top so a lot of the growth in this sector has been taking place independent of what's going on uh with all of these web platforms that are that are popping up it's a trend that's been taking place anyway then secondly i want to point out contract work we've had an explosion from a low base of workers who are employed by one firm but contracted out to work at another firm and some of this is a concern because companies used to share some of their profits with their janitors and their security guards but when those workers are now cabined off and in a separate company they're paid less because there are fewer concerns about vertical equity when those workers are in a completely separate company and that's part of the motivation for the rising contract work uh but i think there's another factor that's causing the rise in contract work and uh that involves technological change and you could go back and raise the very important question that ronald kos asked over 75 years ago why do we have firms why do companies exist if we think the market's so efficient why don't all businesses just reach out to the market and have contracts for everything they need to be done in their business why do they hire employees and employees the workplace is kind of an oasis from the market commands direct workers when princeton wants me to meet with the student they don't say we'll pay you an extra fifty dollars this week if you meet with the student during office hours it's just expected that i hold office hours and that's part of my job so coast came up with an answer which is well it must be efficient for companies to hire workers because they save on transactions costs think about how much work it would be if you have to write a contract with your employees for every task they do at work wouldn't it be better if the understanding was they get paid a regular salary that comes with certain protections and at the same time they are supervised by their manager the uh worker gives up a lot of his or her freedom in exchange for having this regular job and the transactions costs are what prevent firms from contracting out for every particular service they want performed that was kosa's explanation there are other explanations oliver williamson has argued that if a worker has to learn a specific task then the company can expropriate some of the bargaining power some of the rents that the worker would receive after learning that task the the firm could be unfair to the worker and say you know we're not going to pay you very much even though you invested very heavily in learning how to use this word processor or this spreadsheet which nobody else uses because it doesn't do you any good elsewhere and then thirdly information is important and companies have a lot of information about the quality of work that their workers are doing and and so on now technology is altering all of those things one of the beautiful features of uber is you don't have to negotiate with the driver you don't even have to take out your wallet you're charged automatically the transaction takes place in the background automatically and the internet technology is reducing transaction costs computer and information technology is also making work more standardized basically everyone is using the same word processor with the same spreadsheet so it doesn't matter if you're working at the contract accounting firm doing payroll for a particular firm they're all using the same software and that makes it possible to contract out that type of work and of course the technology helps to monitor performance and companies like uber and and ebay have rating systems where they're kind of using crowdsourcing in order to provide this kind of general information so i think this growth in contract work which is not unique to the us is partly a result of companies looking to save money they may have felt that they were overpaying some workers in the past which unfortunately i think is weakening our sense of community within within firms i also suspect it's affecting the quality of work that some workers are doing but there's also a technological factor that's leading to the rise in contracting out and we've also seen an increase in workers who are on call if you're on call your employer can call you in at the last minute you don't have a set schedule and then lastly a rise in temporary help agency work where workers like contract firms they're working for the temporary help agency but they're lent out to work at another firm so i'm going to talk about the dashed lines but these other trends i think are quite important and in the us economy over the last 10 years we've added 9.1 million jobs these alternative jobs have increased by 9.4 million so all of the net job growth over the last 10 years has been in this alternative sector now we can't look year by year and i suspect we're partly seeing the result of the great recession and i have to point this out to be fair to the obama administration since the end of 2009 the u.s has added almost 15 million new jobs so i don't want people to leave with the impression that all of the jobs the u.s economy has been creating in this recovery are in this alternative sector i think that's not the case but certainly the trend over the last 10 years has been for the growth of the alternate alternative sectors to dominate the job market so let me focus on the sharing economy and the pew uh foundation just did a really interesting study where they asked over four thousand seven hundred americans about their familiarity and use of the sharing economy and what they found was that 70 percent of americans have used some type of shared or on-demand online service but a lot of that is buying stuff from amazon or ebay not providing work or or purchasing labor services so if you look at this list half of americans have bought goods or service or secondhand goods online one percent use programs that offered some same day or expedited services um a little over a quarter of americans have purchased tickets online through ticketmaster or stubhub 22 percent have bought artisanal or or or handcrafted products and they're actually website sites like sd that specialize in hand homemade products 22 of americans say that they've contributed to online fundraising projects this is a fast-growing area it's called crowdsourcing if you haven't heard of a kickstarter or gofundme they're really interesting innovations where if you have a friend who is ill and in need of medical care or if you have a cause that you want to support you can put it online and people will make a contribution and i'm actually personally one of those 22 percent of americans who made such a contribution none of that has to do with work in the sharing economy fifteen percent of americans have taken a ride sharing service have taken uber or lyft or one of their competitors only 15 and what's remarkable is that uber is a company that's valued at over 50 billion us dollars today they have over 450 000 drivers yet only 15 percent of americans have taken this service which says to me there's a lot of room for it to continue to expand for this sector of the economy to continue to grow use online home sharing services an example is airbnb where you can rent out your your home or an apartment spare room in your home many people who are listing units on airbnb have specifically bought units as an investment and they're renting them out this is a service i can tell you i've used many times including in cuba because there were not enough hotel rooms when i visited cuba i don't consider this work in the sharing economy although it is a very important part of the sharing economy and you'll see a little bit more on that soon how about ordering groceries uh from from a local store six percent of americans have done that and that's an area where a lot of investment is is is is being made uber and walmart just reached an agreement to have uber deliver products from walmart uh to people in in the area working in a shared office space this is really fascinating new development there's a company called wework we work will provide office space for startups for anybody who's got a small company they will also provide beer and ping pong tables for for entertainment they'll also provide some services like advice on accounting and it's one way in which ideas can be incubated very quickly and can expand very quickly then you get down to hiring someone online to provide an errand or a task only four percent of americans have used the service like taskrabbit and then lastly renting clothing other products for a short time online i never knew you could actually do this until my daughter told me that she was going to a ball and she needed a new dress she only needed it for one night so she rented two two gowns and she wore one of them and then the next day she sent them both back and actually as that story kind of suggests young people are more likely to use these services also people with a college degree or higher people in urban areas are more likely to use these services now if you're confused about what the sharing economy means you're not alone most americans are confused too only 39 percent of americans said that they were familiar with the term crowd funding which is a way of raising money for a cause online 27 percent said they had heard the term sharing economy and only 11 percent said they had heard of the gig economy so you're not alone and i think this indicates that these are still very early days for the emergence of the online sharing economy now i'm going to focus on work in this sector and in particular i'm going to look at workers who i call independent workers i'll give that a specific more specific meaning later on uber drivers the taskers on taskrabbit the people who provide tasks through taskrabbit the delivery people from grubhub and so on they're the independent workers they get to use the intermediary the app or platform to find the customer so you have this triangular relationship where the app is used to connect the worker to the customer and the relationship between the worker and the customer is typically fleeting it's not a um enduring relationship you got to ride from point a to point b and that's it someone comes and they fix your your your fence and then that provision of that service is done and this is typically not a traditional employment relationship in some sense the customer is employing the independent worker the intermediary is just connecting them and taking typically commission a typical commission could be twenty percent for uber or for uh some of the other online apps so the intermediaries have structured the relationship with the workers as independent contractors not regular employees by and large there are a couple of exceptions to that but that's been the case by and large now there have been a number of attempts to measure the size of this sector and they all point to about the same number around half a percent of the workforce these two charts are from a study that was conducted by the j p morgan chase institute and jpmorgan chase which as you know is an enormous banking network has access to everyone's banking account they use anonymous records so don't worry if you bank with jp morgan chase you're not identified and look at the chart on the left and the blue line that tells you the proportion of the u.s adult population who received income from one of 30 online platforms and jpmorgan chase used uh some analysis i'll show you in a moment for me to identify the 30 largest intermediaries such as uber and grubhub and lyft and then they could see if money was being transferred into someone's account from those sources and what they find is that only 0.4 of the u.s population or about point six percent of the u s workforce on a monthly basis is receiving income from those online intermediaries so that's their best estimate of the magnitude of this sector in green they look at platforms that are used to sell goods or to rent out an apartment rent out a house like airbnb and you can see that the online platforms for renting goods or selling goods is substantially larger in terms of the number of people who are receiving revenue but still small the whole sharing economy represents about one percent of the us population on the supply side on those who are making money from these endeavors the right-hand side shows you the cumulative growth and it's growing like mad not so surprising 47-fold increase in the sharing economy since the end of 2012. and both the labor services and the selling of goods or leasing of goods have been growing at an exponential rate thank you this next chart shows you the number of uber drivers in the u.s and uber is a ride sharing service we have a variety of different services through uber there's uber x and this will be very confusing because in europe uberx is actually uber pop there's uber black which i think in europe is often called uberx that's commercial drivers licensed drivers who typically have a pretty high quality car there's uber pool uberpool is a great idea where if you choose uberpool you could carpool with someone else if you're going from point a to point c and there's somebody in between a point b you could choose the option where you stopped you pick up that additional passenger your fare is less there's less congestion on the road because of fewer fewer cars on the road you're using fuel more efficiently and the driver actually makes more money because he is collecting fares from two customers even though they're less than if they were using the regular uber service so what this shows you in the purple line sorry in the green line is the number of uber drivers each month those who are providing rides each month uber has a lot of people join a lot who leave this is the number who are active each month and it's up to now 450 000 when this chart was made it was 400 000. the number of uber drivers has been more than doubling every six months if this keeps up every american will soon be an uber driver so it has to level off that's the thing about exponential growth but it's been remarkable growth now the other line here shows you the number of searches for the term uber on google so if you want to set up an account or if you want to become a driver you would probably google the term uber and you can see a remarkably strong correspondence between the number of google searches for the term uber and the number of uber drivers the reason why that's important is we can actually use that to look at italy and i'll show you a little bit on that shortly this chart shows the number of google searches for other platforms so it's all indexed relative to uber at 100. and if you look at this chart it drops off pretty sharply after uber it makes a lot of sense that the number of searches for a competitor of uber like lyft would tell you about the about how popular lyft is compared to uber and if you look at the number of searches for lyft it's 12 percent 12 percent as common as the number of searches for uber and that's about right lyft is about 12 percent as large as uber so that's about what you would expect if you look at grubhub that's the second most common eighteen and a half percent uh as frequent searches for grubhub as there are for uber grubhub is a service that will deliver dinner from from a restaurant for you or lunch uh the food won't be as good as if you use the service in italy i assure you of that and then uh you can look you see upwork upwork is a company uh was the result of a merger between odesk and elance where these are people who freelance will perform tasks for you online and there's actually been a fair amount of research on on odesk raj jetty's former colleague mandy palace wrote her thesis looking at at odesk for example fiverr i never heard of fiber my students at princeton told me well what about fiber and i said well what about fiber fiverr people will provide a task for you at a certain price of five dollars why five dollars i have no idea and you're allowed to suggest alternative prices fiverr is actually doing okay thumbtack thumbtack people will provide small tasks uh mechanical turk anyone here of mechanical turk a lot a lot of you mechanical turk was set up by amazon and that's also a way of getting people to provide services online i've used mechanical turk to get people to fill out questionnaires and to study different wording of questions and to see how it affects people's answers it's been used a lot in research for that purpose taskrabbit we mentioned sidecar is a competitor of lyft which is lyft and uber which is not doing too well handy people will provide handy tasks cha cha is a really good example anybody ever hear of cha-cha that's about right cha-cha is now out of business it was a high flyer it was on an exponential path cha-cha is a human-based search engine so if you want to search for something cha-cha sends it you know if you have a question if you're on jeopardy and you have a lifeline you can reach out to cha-cha and they had a network of people who would answer the questions the problem is that google was so good there really was no need for cha-cha and it does teach you something because i think it says that not every company here is going to succeed and in fact if you look at this list it's very similar to what pew found where we're seeing growth and kind of uh viability in this sector has been in transportation food delivery which is related to transportation and performing small tasks uh okay i could go on but uh let me let me move to the next slide this chart is a little bit hard to see but it shows you uber x and uber black the number of drivers and i should also give you a disclosure uh some of the research i'm talking about including this slide i conducted together with jonathan hall who is the head of research for uber and i was commissioned to work on this fascinating project with jonathan so what do you see here uberx which in europe is uberpop is what is driving the growth of uber the exponential growth of uber is entirely due to uber pop uber black is growing linearly if uber was limited to umer black it would be perfectly fine company i doubt its valuation would be anything close to 50 billion dollars and i think there's a very important lesson here for europe because what is scaling for uber and i think it's true in general general for ride sharing is the low barrier of entry service anyone could be an uber x driver who has a car that's in decent shape and who has a good driving record one doesn't need to be a commercially licensed driver one doesn't uh isn't required to have gone through the training that commercially licensed drivers are gone through and to pay the fees that commercially licensed drivers have have undergone and i'll come back to that point this chart shows you for 20 cities in the u.s how much uber has grown since it began so uber started late in miami and austin and houston it started early in seattle was actually the first city san francisco was one of the early cities los angeles which is sort of tailor-made for uber because if you've ever tried to get a taxi on the street in los angeles good luck and uh the city is so spread out with so much traffic it really works quite well for uber's model the cities where uber started later it has the fastest growth rate and i think that's related to something that i mentioned earlier which is people are still learning about uber they're still getting the app and it's spreading very quickly by word of mouth so by the time uber opened in miami which was only about three years ago it had its fastest growth rate of any american city and you know these numbers are quite spectacular in los angeles there are more uber drivers than there are taxi drivers now since uber started in los angeles the number of taxi drivers have declined but not nearly by as much as the number of uber drivers have been added and if you look at the total number of trips adding taxi and uber as providers uh in los angeles they're up about 30 40 percent you know i should have mentioned uh because many of you might not have been familiar with uber or other ride sharing actually raise your hand if you've taken uh uh uber or ride sharing ride wow in the u.s everybody would have raised their hands so the way that these apps work is that you take out your smartphone and you request a driver and within 30 seconds the app finds the closest driver who's willing to provide a ride for you and you can identify using gps which is part of the app where the driver is in relation to where you are you can also enter the address where you want to go you don't have to exchange a word with the driver the driver could speak a totally different language than you and the app will tell the driver where to take you and then the app on the driver's side has gps and it gives the driver a route to take the presumably the fastest route to take you to your destination the driver has the ability to work for uber and another company at the same time or to watch television or take care of his or her kids or run a personal errand while the app is on the driver can turn down a request for a ride if he or she wants the driver has 30 seconds once the app tells the driver that you're the closest one to the customer who wants a ride to accept or decline offering the ride service to that that customer and the fees that the rider pays to the driver are all handled through a credit card exchange uh the driver is sent sorry the the customer sent an email basically as soon as the door closes uh telling the customer how much he or she was charged for the ride the bill shows the route that the driver took when when it began when it ended the fares vary from city to city on average they're about 30 percent less than what taxi drivers charge from best i can tell then you should also know that uber has something that's very controversial called surge pricing which as an economist i think is a great idea if there's an excess of demand relative to the number of drivers who are available uber will raise the price it's what economists think should happen when you have an imbalance between demand and supply and the price could go up by a factor of 10. now that's intended to bring more drivers to the area and it's also intended to discourage passengers who really don't need to get to their destination so quickly from using the service so that is how the market clears unlike taxis where there's just a constant fare throughout the day typically this shows you san francisco new york london and paris the number of uber drivers they're scaled to population so you could see exponential growth in san francisco pretty good growth in new york and london and very modest growth of uber in paris now i wanted to provide you some information on italy and i wasn't able to get that from uber but i was able to use google trends so let me describe this chart and this tells you a little bit about my life also for the six countries that i visited in the last three weeks i got information on the popularity of searching for the term uber relative to all other searches that people in those countries were doing so the u.s is the um i don't know what color you call that blue light blue line second from the top at the end singapore which is purple has more usage more intensive use of uber than in the us malaysia malaysia has its own uber-like company called grab taxi which is quite successful it's one of the really interesting examples of an internet startup in asia and uh nonetheless uber operates in malaysians doing quite well then you can see the uk thank you then you can see the uk france and italy at the bottom so what i said earlier i think europe is moving much more tall much more slowly to uh the sharing economy i think this is an example and if european countries don't permit a service like uberpop where a broader set of drivers can enter i think that you'll continue to see much much less usage and uh the the the the spread of ride-sharing uh applications in europe i think will lag far behind asia and north america if that's the case okay well what about the drivers this is such a good deal for the drivers i think the most important aspect of the market for the drivers is the flexibility that the sharing economy offers and again uber is going to be my quintessential example because it accounts for so much of the sharing economy 61 of uber drivers have another job about half of them have a full-time job and half have a part-time job which is rather remarkable only about 39 percent of the uber drivers are driving for uber and not doing any other paid work the drivers vary their schedules tremendously from week to week sixty five percent of the drivers drive either twenty five percent more or twenty five percent less from one week to the next forty percent drive either fifty percent more or fifty percent less from one week to the next that's just the total number of hours if you look at the particular hours they've our varied tremendously and since i've started working in this area i've taken to quizzing my uber drivers about what other work they do and it just leaps out at you how important the flexibility is examples are real estate agents who have some downtime so they turn on the uber app parents who have to take their children to school and pick them up a certain time from school in between have time available a building inspector i once once met even a college professor from from rutgers who said you know you never know what happens uh it's good to be prepared in case you need another career so the flexibility i think is a major factor and the drivers themselves cited 85 percent of the driver said that flexibility was a major part of the appeal a great many of the drivers are doing it this at a very low intensity level 51 percent are working 15 hours or less per week i'll show you a little bit more about their hours distribution and i'll say a little bit more about their earnings and fees in a moment so this compares the work hours of uber drivers in a week to taxi drivers and a word about taxi drivers is an order in the u.s most taxi drivers don't own the car they're driving in the u.s most taxi drivers lease the car and the medallion which is a license to drive the car from the taxi company or a leasing company and they typically lease it for a 12-hour shift so they'll come in and they'll pay the amount of barriers 120 140 to lease the car for the day they have it for 12 hours well once they pay that the marginal cost is pretty low so they tend to drive long shifts uber drivers typically use their own car uber has a new service where you can lease a car from uber at what look to me like reasonably good terms but most of the drivers are using their own cars and if you look at the distribution of hours they're like night and day so 51 of uber drivers are working 15 hours or less a week only four percent of taxi drivers are driving so little if you look at 35 hours or more which we consider to be full time in the us only 19 of uber drivers are working 35 hours or more per week versus 81 of taxi drivers so it's quite quite different and the uber drivers are floating in and out depending upon what other things they have going on in their life and also depending upon whether they think it's a peak time for being a for hire driver whereas the taxi drivers have the car for a very long period of time through the rush hour and through the slow period there was a study that was done looking at uber drivers in france and they looked somewhere in between taxi drivers and the uber drivers in the u.s uh 41 40 sorry 44 of the uber drivers in france are working 30 hours or more a week and i guess in france 30 hours counts this full-time uh that's why it wasn't broken down at 35. um so the you know european country which permits uber but only the commercially licensed uber drivers that looks a bit more like taxi and i think that you don't get some of the advantages that i'll describe in a moment in more detail that come with the flexibility from uber pop drivers what about their earnings this turns out to be a pretty controversial topic we can calculate using uber's data how much money the drivers make per hour net of uber's fees and what are uber's fees they're typically a 20 commission that goes to uber as well as one dollar for every ride which goes towards providing insurance i didn't actually know this so most people don't know that uber drivers do get insurance from uber up to a million dollars of insurance and it's paid for by taking a dollar of each ride we don't know how much money the drivers pay for gasoline it depends it depends on the kind of car they're driving it depends upon how efficient the driver they are we don't know about the depreciation of the car which is also important or the maintenance of the car there have been a couple of attempts to try to measure the costs they come to between three five dollars an hour so i've shown this with five dollars an hour as as the cost it varies from driver to driver and i'm working on a project trying to get a better measure of what the drivers expenses are we can compare that to taxi drivers now this is a funny group of taxi and limo drivers the bureau of labor statistics collects data on taxi and little drivers who are employees so it's not your typical taxi driver it's only about 20 of taxi drivers but they don't have fees they're they're hired to drive somebody else's car and they make about 13 an hour so what i take away is that the uber drivers are earning about as much perhaps a bit more than taxi drivers are that i think is something you would expect why do i say that well uh for one thing uber drivers are using their own car so they ought to get some return for using their own capital in addition to being a worker they also are capitalist in that sense because they're using their own equipment in addition there's pretty easy mobility between being a taxi driver and being an uber driver and a lot of taxi drivers moved over to become uber drivers i suspect they did that because the flexibility was attractive to them and the compensation was at least as good as what they were making as as taxi drivers i'll say more about earnings in a bit jpmorgan chase did a fascinating comparison of when it is that people are working in the sharing economy so as i mentioned before for uber drivers and for others in the sharing economy they're their own boss they get to choose when they work and whether they work many of them work for a month in the sharing economy and then the next month they don't i already mentioned many of them work very short period of time even in that month when they are working in the sharing economy so what jpmorgan chase institute could do would be to look at people who supplied services in the sharing economy at some point over a um say three year period and they could look at what their earnings were from employment in months when they provide labor in the sharing economy what their earnings were from the sharing economy and they can compare that to other months when they only worked on a regular job and what they found was that when workers incomes dip from their regular job they're more likely to supply labor in the gig economy they're more likely to start to drive for uber or to provide services in some other through some other platform and remarkably the uh drop in regular earnings was totally offset slightly more than offset by working in the online economy so to interpret these numbers in the typical month when someone worked in the online economy their earnings from a regular job had dropped by 14 percent but their earnings from the gig work raise their earnings by 15 so it's slightly offset uh the loss and earnings from their other work so in that sense i think a lot of workers in this sector of the economy are using the opportunity to provide work flexibly to offset negative shocks to other sources of income and we have a serious problem in the us a very high income volatility from one month to the next or one year to the next and at the same time inadequate savings for an emergency american workers have a very low savings rate and when their income falls perhaps because they lose a job or because their hours are greatly cut back that leads to lots of problems it could lead to foreclosures on their home it could mean that they have a lot of difficulty getting medical care because they don't have a rainy day fund to draw down from the opportunity to work in the gig economy helps them to smooth their income and therefore smooth their consumption and i think that's a very important feature of of this work which is not widely appreciated what about the efficiency of the sector i was able to get for five cities information for taxi drivers and for uber on how many hours they have their app on or how many hours they're working and what fraction of the time they have a passenger in their car and i don't know if you've noticed but uh whenever i approach a taxi at newark airport you typically put down a book because they spend a lot of time waiting for the next customer and the numbers are rather remarkable so for taxi drivers in boston only 32 percent of the time that they're working do they actually have a passenger in their car for uber it's 46 of the time new york which is the only place possibly in the world i think in america at least where hailing a yellow cab on the street makes sense there's not much of a difference between the capacity utilization rate the fraction of time there's a passenger in the car and between uber and taxi and in san francisco the cab drivers have a passenger in the car 39 percent of the time and uber has a passenger in the car 54 of the time this is a very important fact because this explains why it is that uber can charge their customers 30 percent less than taxis charge their customers yet the drivers seem to be getting paid at least as much in uber as in taxi and i think this is an indication of the efficiency of the ride-sharing model i think the app is part of the reason i don't think it's the only reason but clearly the matching algorithm that the map uses is more efficient than calling up a radio dispatcher having a radio dispatcher get on a two-way radio and contact a taxi driver or having the taxi circle around looking for a customer but i think there are other reasons that explain the efficiency here one is the labor supply model that i mentioned earlier taxi drivers have their car during peak hours and during slow hours uber drivers know when the commute when when there's the rush hour and they're more likely to uh work for uber at that in those hours to turn their app on and provide ride sharing services at those times there are two other reasons that i think explain the greater efficiency of uber one is scale uber now is larger than the largest taxi companies in just about every city and there are big scale economies because if you call up one taxi company the chance that there's actually a car very close to you is not as great if you called up the largest one which has cars distributed throughout the area and uber also avoid some regulations which in my judgment are probably very inefficient and not helpful for uh certainly not helpful for customers so for example if i take a train from new york to princeton junction which happens to be in west windsor new jersey the taxi driver is licensed by west windsor when he drives me the one who drives me to princeton university princeton university is in princeton new jersey which licenses a different set of taxi drivers the driver who took me to princeton cannot pick up someone at the cab stand and take them back to the train station even though that's where they may want to go that kind of regional licensing is very common in the us it's a real problem between arlington virginia and washington if you've ever tried to hail one of those red taxis in washington and they just drive right by you that's because they're licensed in arlington virginia and they're not allowed to pick you up i also looked at what fraction of mileage the drivers drive they have a passenger in the car and these numbers are really remarkable so los angeles is on the left and seattle on the right and in los angeles 40 percent of the miles that taxi drivers are driving they're driving with the passenger in the car for uber at 64 percent and to interpret those numbers for every mile that a taxi driver in los angeles drives with a customer in the car he drives a mile and a half with the car empty for uber for every mile that the driver is driving with a customer in the car he drives half a mile with the car empty so if you think about the waste of resources the burning of fossil fuel the pollution and the congestion on the road there i think are clear efficiency gains from the ride sharing service what about the effects on the traditional economy this is meant to depict the reaction of hotels to airbnb and taxis to uber and i think the reaction is a bit different in europe u.s and europe in the u.s the taxi drivers are not harmed nearly as much as one might expect from uber compared to in europe in the us the taxi companies are harmed so what we've seen in the us is that the price of medallions the taxi license has plummeted even in new york it's dropped by a third that's a big capital loss for the businesses some of them some of the largest ones are going bankrupt the taxi drivers however are in a pretty competitive industry they're not employees typically they're not getting benefits they are independent contractors like the uber drivers so um the effects of ride sharing on the traditional economy i think are really quite complicated and they vary sector by sector so the way i think about the effects in general equilibrium is that there are three potential effects that are important one is that ride sharing and these other services have increased the demand for workers with moderate skills even in los angeles where uber has been remarkably successful the number of drivers is considerably higher than it was before uber entered the reason is you've got a more efficient technology so you have more customers more trips being provided that increases the demand and if there were enough companies like uber doing that i think that will help raise wages of all workers with a moderate level of skills i think at the current scale where the whole sharing economy is only half a percent of the us economy that we're not talking about a major effect uh yet on on the overall level of wages for workers who could provide these services but that should have a more general positive effect on the position of workers with a moderate level of skills secondly the uber drivers have very little bargaining power they are independent contractors with a big company so they can't dictate the terms of their compensation moreover there's free entry so basically anyone can become an uber driver so if the compensation is really high what you would tend to see and what actually is the case is a flood of new drivers coming in and that pushes down the utilization rate so the earnings per hour actually drop because you have more and more drivers coming in and then third an issue which a number of people have been concerned about is the effect of the sharing economy on traditional employees and in particular is this going to weaken labor standards is the fact that you can now find the janitor through taskrabbit to fix your plumbing going to mean that plumbers who work for a plumbing company are now facing much stiffer competition the plumbing company will be less likely to provide benefits or you're going to have more workers providing plumbing services as independent contractors rather than working as a company where they get the legal protections that employees get and i think that that is a very legitimate concern i think we need to look case by case to see how important it is as i said in the u.s at least as far as uber is concerned i don't think that's such a risk because the drivers are independent contractors my phd student judd cramer studied the impact of uber on the wages of taxi drivers across cities and as i mentioned before uber entered some cities late some early had a bigger impact in some cities than others so he looked at the cross city variation and its impact on the number of taxi drivers and the compensation of taxi drivers what he found was that as uber entered a city the number of taxi drivers fell but their wages actually remained pretty steady he didn't find an impact on wages which again is consistent with the view that the taxi drivers were not being paid particularly well to start with their wages were determined at pretty close to a competitive level now one last point that i want to emphasize is that policy can shape the emergence of this sector for both good and bad policy could choke it off and policy can make it more compatible with our existing employment system i think that there are lots of exciting opportunities here but i think we don't want to jeopardize the 99.5 percent of workers who well it's not quite that high in the us call it 85 percent of workers who have traditional jobs and who benefit from a social compact that's evolved over a century that provides essential benefits and protections to workers so what i've been working on together with seth harris who was deputy labor secretary and as a labor lawyer is a proposal to create a new category of workers a new legal classification of workers who would get many of the benefits of the social compact but the ones that make sense for them so we would be very careful to tailor the benefits that workers in this sector receive so that we maintain the flexibility for the workers to come in and choose their own hours and work whether they want yet at the same time make it so that they receive important protections that employees receive this will help protect the social compact for traditional employees i think it will also improve the working conditions and the lives of the independent workers who are supplying services through the online platforms and where we are now is i think not an optimal situation our labor laws currently are very obsolete when it comes to this new sector and what we have in mind are independent workers what makes the independent workers different than traditional employees is that like small businesses they get to choose when they work whether they work but the intermediary the company like uber still exerts some control for example they could exclude them from using their platform if they think they're not doing a good enough job so i said our current labor laws are obsolete what do i mean by that well in the u.s we have two classifications of workers they're independent contractors or their traditional employees we have many different labor laws we have the fair labor standards act which requires overtime premium and minimum wage we have erisa which refers to health care and pensions that companies provide and regulates those benefits for employees the irs which withholds income taxes and determines whether the company needs to pay half of the social insurance contribution for employees or if someone's an independent contractor they're responsible for paying both halves the social insurance contribution national labor relations act which is labor law civil rights act which is protection against discrimination i can go on and on we have all of these separate labor laws they use their own standards for defining who is an employee and who is an independent contractor they're not identical they're not aligned and that is creating a legal mess for a number of reasons we're seeing court cases uh uh being uh brought against the intermediaries the platforms like uber in a number of jurisdictions under a number of laws and it's quite conceivable that under some of the laws the workers will be ruled to be employees and under some they'll be ruled to be independent contractors or in some jurisdictions in some states under the same law you could get a discrepancy in the rulings now uh that's not in anyone's interest i think it creates a lot of confusion it could potentially stymie uh innovation so uh what seth harris and i do is to propose that we have this new legal category of independent workers what defines them is that they get to choose when they work whether they work if they work at all where they work they often use their own equipment the intermediary the company that's matching them to the customers exerts minimal control some control no no no doubt like they can uh we would say they'd be able to set the fares uh they'd be able to uh set the amount that the customer pays but they don't schedule the workers hours they don't tell them exactly how to do their jobs the worker has a lot of discretion and once we define this class which by the way doesn't have to work through an online intermediary there are offline intermediaries anyone ever buy or hear of avon michael berta has probably purchased avon products but his mother has avon goes door to door and sells beauty products it's offline it's a very old company functionally they're doing the same thing as in that triangular relationship you have this intermediary between the workers and the customers and the customer gets the money from selling the product and pays a commission and there are others like that in fact taxi drivers are like that where they are using a traditional dispatch system and the taxi companies between them so what would we do we would extend much of the labor protections that regular employees have to these workers but we would be careful to keep the fixed costs low because of the fixed costs are high then the intermediary is not going to benefit from workers coming in for a short period of time they would prefer to schedule the workers for longer longer hours so what does that mean in practice i think most importantly we would allow the workers to form an employee association and bargain with the intermediary that's something the intermediaries initially didn't like all that much we would extend civil rights protection amazingly to me there's very little protection against independent contractors when it comes to discrimination it's okay to discriminate against an independent contract it's legally permitted to discriminate against an independent contractor based on race i'm sorry based on on sex um based on ethnicity there's a very limited protection that goes back to the 19th century based on race the civil rights act is much stronger protection so we would just extend the civil rights act to independent contractors in this type of an arrangement we would have the intermediary do tax withholding which would improve our tax system we would require the intermediary to pay for half of social insurance contributions we would require the intermediary to make a contribution towards health care or towards the health care exchanges because otherwise one can make the argument that they're free riding on the workers other employer who's providing health insurance now some of these costs would get shifted to the workers in the long run i think that's the economics of it but probably not all of it there's some benefits we would not provide time and a half for working more than 40 hours a week if workers get to choose their own hours they don't need protection against an employer who's going to schedule them to work 50 hours in a week they get to make that decision themselves unemployment insurance it's very hard to see cases where workers in this sector would actually qualify to receive unemployment benefits in the u.s because they're not laid off in the traditional sense they're choosing whether they work or whether they don't work the most controversial thing we proposed was to exempt these workers from the minimum wage and anyone who's familiar with my work knows that i'm not actually opposed to the minimum wage i think it's actually conceptually very difficult to implement a minimum wage for these workers if you can work for uber and lyft at the same time who's paying the minimum wage you have both apps on while you're waiting for a customer uh to call on you how do you allocate responsibility for the minimum wage moreover it could be that you're actually doing a personal task and you're reading a book and you're really mostly enjoying leisure or you're doing personal tasks the apps are not supervising the workers to that extent that it feels to me that the minimum wage is justified now i think that having a labor union also solves this problem because the union can negotiate say for fees per mile driven or something like that as an alternative so let me just conclude by saying we think we could structure our labor laws in a way that's appropriate for independent workers who get to choose their own hours we can have a more efficient system what really struck me when i talked to some of the companies in this area is they said you know we would like to do more for the workers we would like to provide more benefits like life insurance which the workers want we would like to provide car insurance auto insurance we would like to provide more portable uh retirement benefits but if we do that the way the labor law is written we're much more likely to be judged to be an employer because that's one of the factors that's considered so even though there are big efficiencies from a company like uber using its scale and its pooling advantages to provide different forms of insurance to workers they're not doing it and i think that's a loss to the economy so we would allow portable benefits and i i think that's kind of the lowest hanging fruit and there's a lot of support for portable benefits for workers in this area but that's one easy thing to do we would be neutral with respect to employment status so that companies would not want to take regular employees and turn them into independent workers for one thing they gain a lot more from turning them into independent contractors today where they get out of the entire social compact but for another thing they would have to relinquish a tremendous amount of control i don't know too many companies who would say to the workers come to work when you want it's up to you you don't even have to tell us i can't imagine my university doing that to the faculty although many of them think that that's already part of their contract and as i mentioned it doesn't matter whether you use a technology or not conceptually it's the same type of a triangular relationship so let me just conclude uh where are we in um in our proposal senator mark warner who is one of my heroes in the u.s senate discussed our proposal and he said we had such a perfect compromise we managed to piss off all sides no one is quite ready for compromise yet the labor unions think that these workers should be ruled to be employees so far they've lost a lot more cases than they've actually won and the workers haven't gained very much the companies believe that they're employees but interestingly in a number of lawsuits the settlement has been moving in the direction of what we proposed for example uber has voluntarily agreed to meet with employee associations in california and massachusetts of their drivers they agreed in new york without even a lawsuit to work with the machinist union to set up an employee organization for the drivers now the legal status of those organizations is a little bit uncertain because anti-trust laws may prevent them from from being implemented so i think we're in very early days of the sharing economy it's growing extremely rapidly eventually i think it will grow in europe but so far i think european authorities have managed to greatly slow uh this segment of the economy i think it's creating lots of exciting opportunities for customers for businesses and for workers and i think it's also bringing some risks and i think it's up to us collectively to design policies so that the growth of the sharing economy works for everybody and then the final point i want to make which i think is particularly relevant for italy is that progress requires disruption if you think about what brings about productivity gains it has to be the case that we could do more with less that we have to be able to disrupt certain sectors and disruption is painful but ultimately that's how productivity increases and how societies grow and i think it's very important that we tailor our policies so that we humanize this type of disruption so that the hardship that it inflicts uh is is minimized so that we get the benefit of the productivity gains and at the same time can protect the existing social compact and protect the most vulnerable so why don't i stop there and i hope i left time for questions but i want to give you a good news because when you were flying from from vietnam to italy the european uh community made an opening toward the sharing economy saying that we should open room for for the new sectors uh and to limited as much as possible regulation on non-necessaries not necessary and to for forbid these services only in very special limited cases so there is a new orientation of the european community to to open the room let the door to the sharing economy that's very important we've discovered many things hearing this lecture by professor for example we've learned that the sharing economy is not going to replace anything but it's just going to increase demand in the case for example of the growth of uber we've seen a much greater growth of uber and that was not compensated or offset by the reduction in taxi drivers and this is important there's a growth in demand this means that there should be any access barriers this is a problem uh in certainly europe and in italy even more so we haven't talked about the fact that the digital technologies enable us to adopt control mechanism also of reputation of those providing services and buying such services um that was what the taxi medallion should have done in that uh once you basically act as a lawyer um you enter into an association and the association in a way guarantees that you are able to perform such services but now thanks to the reputation ranking we basically get the same guarantees and the sharing economy also becomes a great stabilizer in terms of wages because it is more active when uh regular employment uh declines so these are certainly aspects of that making the sharing economy very attractive to us unfortunately there's not much time available i think that we can have at least a 10 minute q a so short question if you can there's a girl here asking for the floor another guy in the back short questions very fascinating presentation thank you very much um credit and taxation i was wondering if you had the opportunity to see what does the this new independent worker model means for the ability of these individuals to get credit from the banks and also taxations ability to capture income tax and corporate tax and social security tax thank you thank you so that we can get okay a few few questions uber is growing incredibly but based on what i know myself it is also growing it its debt is growing it is not gaining it leaves on investment there are many companies investing on uber is it bringing about a true disruption in the market increasing its debt it's leveraging so much don't you think that when it reaches as much as 50 of the market it may exploit the drivers uh hand on the mic to the gentleman before you good afternoon concerning drivers you were talking about a new category of workers that may be identified with a new category again also of legal protections i have learned about these new technologies i know about uber but i know there are also services that replace man uber car drones and all these other services have one major objective in the next decade or two probably they're going to replace men altogether how do you think how long do you think that we're going to be protected that our jobs are going to be protected for so i live in berlin for one year and a half and i used to rent out my room until the organization asked me to stop because you know the labor mobility in europe and the u.s is totally different and also europe has much more labor protection in the us well it uber and airbnb book in china and in the u.s because labor protection in china us is not as strong as it is in europe so how do you balance say you know the taxi providing protecting the no code industry and then using the new app and then creating the new generation of independent workers even though i know like it is possible to work as independent worker in berlin but it's not acceptable in the european system hello congratulations going back to the value of the company um i would like to know how much you think uh the value of the data that are being accrued over uh uber is going to be part of of uh the discussion i i my impression is that uh uh getting all the data that's how people move around and and setting the standards worldwide and being able to be the one that could deliver additional services like other platform businesses we know very well it's gonna be probably the real plus of uber rights it's only probably part of the value in my opinion how much they can scale okay okay so uh very quickly i haven't done much on on credit although i do know that uber has a plan to help the drivers purchase a car which is more advantageous than if you wanted to go through a bank on your own and the reason why uber can do that is they directly take the fees and a portion of it and goes to the financing company the thing about the sharing economy which i think is important particularly in italy is it's above ground it's recorded it's not a cash economy and in a lot of areas like home repair it is under the table part of the black economy so i think there's the potential for the sharing economy to improve tax enforcement where i think in the u.s there's a risk is we know that the biggest tax gap occurs for it for small businesses independent contractors partly because they don't do a very good job doing tax planning so at the end of the year when they need to write a check they're not prepared to do it which is one of the reasons why i think tax withholding is very important innovation by the way one of the most remarkable things about tax withholding is it was invented by milton friedman during world war ii when i worked at the treasury department i don't think most people would associate anything having to do with improving tax collection with milton friedman the valuation of uber which which i don't want to get into too much detail on a lot of private companies have invested equity in uber and i think they've done so because i think it's a very profitable model unlike many internet companies uber does make a profit in many many cities in many countries my understanding is in china they're not particularly profitable because they have a lot of competition from chinese companies and they're investing very heavily to grow in china probably at the cost of a fair amount of profit but in the u.s my understanding is that they are extremely profitable on a cash flow basis and there are companies in in the internet world which have never made a profit amazon's a really good example of a company that has an extremely high valuation and uh always loses money now i think if amazon wanted to it could raise its prices and make more money but i think it's still kind of growing its business and that's been a strategy all along i don't think leverage is a company is a problem for a company like uber since it's mostly using equity the question about if uber gets bigger more than half the market which it probably already is will it exploit the drivers i think it's limited in its ability to exploit the drivers because it needs the drivers and if it exploited the drivers and drivers would leave and they would provide less good service and in some sense what uber's incentives are is to maximize revenue and uh one of the reasons why i think having an employee association is so important is that the association could bring some concerns to the company which are in both the interest of both the workers and of the company the question arose about driverless cars which i think is a very good one and it may be in 10 years we look back and we say well why did we have the session at all robots are providing these services i'm very excited about the prospect for driverless cars because if you think about where productivity growth will come from and productivity growth has been remarkably weak we've actually faced the opposite problem of machines replacing workers especially in italy which has had weaker productivity growth than the us the problem that we've had is that we haven't had enough demand and enough gdp but so far in the u.s we've been hiring and hiring more and more workers to produce less and less given our productivity numbers i'm not worried about the future being one where there's no work at all i say that for a couple of reasons for one thing people have worried about that for centuries and it hasn't been realized but maybe now the technology is so different that it will replace even white collar jobs i'm still skeptical for one thing i think we could see work hours decline and when countries and economies function well and productivity rises we take some of the gains of productivity growth and shorter work hours one of the problems in the us is that we haven't seen work hours come down in spite of the economic growth that we've had over the last quarter century and i think public policy has failed us there i think we should actually have more of a overtime premium to bring we i think we should lower the threshold for overtime to bring down uh bring down work hours and then in addition if the economy functions well we come up with new services for people and if you think about the technology now we have the technology to replace most restaurant workers i mean i don't need to order a cappuccino from someone there are machines that make me cappuccinos but still starbucks employs lots of people because part of the service that one is buying is the person behind the counter the grocery store around the corner from here in trento dispenses water and other products through a machine on the outside of the building which i was surprised by the range of products but even so there are a lot more products inside and people working inside because i think the human interaction is valuable even in situations where we currently have the technology to replace a large number of workers the uh situation uh if with with airbnb and uh kind of the regulations of the sector i think we need to think really carefully about i think airbnb is a great innovation on the other hand if airbnb avoids avoids paying occupants occupancy taxes which hotels have to pay that's giving airbnb an unfair advantage if airbnb uh rental units don't have well-marked fire exits or are not safe then i don't think that's in society's interest so i think we need to think long and hard about the regulatory protections that are in society's interest what gives me pause and makes me enthusiastic about the sharing economy is that there are a lot of regulatory requirements that are just barriers to entry that protect incumbents without service serving the broader good and in the us as well as in many other countries we've had a proliferation of occupational restrictions making it harder and harder for someone to go into a profession beauty parlors in the us in order to cut someone's hair you need a license well that's okay and you can see why you don't want someone to cut your ear off when they give you a haircut but the person who washes your hair in the u.s is required to have a license and i can tell you i wash my hair every morning and never had risk of an accident without any training at all so i think it's kind of run amok and the ability for online companies to kind of come in and disrupt that i think is actually healthy for society because those regulations have proved very very difficult to go back and say do we need this now with changes in technology do we really need these kinds of barriers to entry then the last question about the data is a very interesting one and i think the data is extremely valuable i suspect it's not being used to its fullest extent yet one of the and we're learning lots and lots of things for example the ride sharing is combined with public transportation we're seeing people get picked up from subway stops and train stations and it's actually complementing existing public transportation it can be used to make much better maps because think about all the data that's generated by the routes that that the cars are are taking i think one has to balance the benefits of analyzing the data with the personal uh the needs for for privacy and personal security and i think that's a difficult issue i could tell you when i worked with uber they had different databases and the research team was not allowed to merge their data into one from one database to another and in fact with the survey that we did of the drivers the uber employees were not allowed to actually have the micro data i was the one who had access to the micro data so they do have some walls that are set up but i think it's very important that companies are explicit about that and transparent about it if i may i would like to ask a question myself i would like to ask mr kruger now one of the problem connected to sharing economy could be exploitment unless in the case of rvnb it's been said they don't pay occupancy taxes it could be unfair competitions towards hotels hotel chains if all the transactions are so they are all connected so all the tax obligations are complied with everything is regular all the operations are traceable can be identified so maybe there's a clear relationship between the two things that we can have an improvement between let's say a cashless society and a fairness as it were of the sharing economy i i completely agree with that i think what it's going to require is carefully crafted regulations so that we're collecting the information we need for the enforcement of of the rules to balance the competition one doesn't want to give this emerging sector an unfair advantage and i think the fact that it's generating so much data is going to help our authorities in a number of enforcement areas thank you now i think we have time for a couple of more short questions please two more and then we have to finish leaving aside uber do you think that the largest tech companies that accumulate big profits and and basically they have a lot of cash uh without paying quite any taxes do you think that the the regulators the global regulators are taking seriously the possibility to apply a global tax or in any case uh take all these situations thank you now i will ask my question in italian i'm not sure about what i'm about to ask anyway i'll try now i am an organizing an organizer of cultural events i work in the culture industry i organize events and a very common widespread problem is how to evaluate cooperation contributions in when organizing an event in the sense that the the event what is earned what is gained is difficult to share to spread between those who contributed so maybe a sharing economy we have a subject organizing a cultural event of any other type of exhibition requiring the contribution of many different people maybe a triangular scheme like yours with a consumer an intermediate an intermediary in the work it may be using a virtual type of currency for instance so that we give value to these contributions to these tasks that are very difficult to assess sometimes you contribute maybe with half an hour some people do something on facebook some people do something in terms of graphics do some advertising but it's difficult you end up with a final benefit and it's difficult to know how much should be given to whom one last question here in the front row and then we really must finish now my question is the following the expansion potential of the sharing economy uh and the net economy in the financial sector that obviously plays the major role in the current world now besides crowdfinding there are other startups that are dealing with banking services those who can lend money are matched with those who need to borrow money at much lower interest rates compared to traditional banks i think that could be interesting competitors to traditional banks what do you think one last question thanks thanks for this great uh presentation i learned so much i took more notes i've taken more as many notes since i was in grad school but um you commented on unions and i was one i just wanted to have your personal opinion on what kind of chance would unions have in this environment richard freeman has made many comments predictions they've all been wrong i mean it'd be nice to see him be wrong you know in in the right in the right way in other words it has some sort of resurgence of organized labor okay um so the question about taxation i think is a very important one and i think the way i interpret it is leaving uber aside because i don't really know about uber's tax position and i suspect it's relatively difficult for uber to attack to shift its revenue to low tax jurisdictions the u.s corporate tax code in general is just terrible when i put together the economic report of the president a few years ago we had a table which showed that the amount of revenue that american companies are sorry the amount of profit that american companies are reporting for bermuda is eight times the gdp of bermuda now that suggests that there's a fair amount of clever shifting of income to country where the income really was not earned and the european tax systems tend to be better than the american the territorial systems uh that that you have uh in in europe by and large um is essentially what europe has done is to switch from corporate income tax to value-added tax and in the u.s we haven't done that uh our corporations are probably at a disadvantage compared to europe but we give them all kinds of loopholes so they pay relatively little tax yet face a high marginal tax based on the statutory tax rate so there's a lot of ground for improving our income tax system and there are lots of examples of companies like apple which is a tech company of shifting its its income abroad and i do favor for the u.s having a minimum tax on global income and that's something that the president has proposed there was a proposal in congress that wasn't too far off by david camp in the house ways and means committee and paul ryan i think blocked that from coming to a vote because ryan was scheduled to be the next chairman of the ways and means committee that didn't quite work out since he got a better job as speaker of the house i think there's ground for compromise on corporate tax reform uh in the u.s which would lead to a more efficient system i'm not very optimistic after having spent four recent years in washington that our politics are going to lead to that outcome but i think that there are lots of ways of improving corporate tax system independent of the tech sector it's kind of a more general problem on the organization of cultural events it's related to the last question from michael berta i think there's an enormous potential for using social media for organizing and traditional labor unions in the u.s have been extremely slow to take advantage of it one of the problems i think we've had is that traditional labor unions in the u.s want to operate on a 1950s model and that's not where the economy has been heading and that's one of the reasons why labor unions in the private sector represent only six percent of american workers but there have been some innovations one i would highlight is the freelancers union which was set up by sarah horowitz who was an old classmate of mine she wouldn't like the use of the word old she was a classmate of mine in college where she has formed an association to represent freelance workers and to help legislation to protect them for example in new york there was recent legislation that was passed which said that freelancers need to be paid within a certain amount of time because one of the problems that they have is that the contractor delays and delays sadly one of the presidential candidates in the u.s was a prime offender of this type of behavior and i think that this law is an example of the kinds of thing that this type of a remote association can achieve in addition to providing some low-cost benefits like uh like insurance so there are some regulatory hurdles that she faces but where she's been remarkably successful is in using social media to expand and she's grown she's formed the fastest growing union in the u.s that she's actually grown at a slower rate than she could because she wants to make sure that there aren't glitches along the way and i think that there's a lot of potential here for similar types of associations they may look different than the steel workers union or the teachers union but i think they'll provide potentially provide a very important service peer-to-peer lending banking i think there's a a lot of opportunity here and i really worry about the risk and so far it's still quite small banking is banking in my view and banks are subject to runs we kind of learned throughout our history that you need deposit insurance for banks that you need prudential regulation you need to prevent banks from taking excessive risks and peer-to-peer lending strikes me as subject to all of those problems if it doesn't fall under the same regulatory umbrella as traditional banking and so far it also seems to me that the judicial banking system has played a pretty big role in peer-to-peer lending the probably the largest one the lending club in the u.s uh who's purchasing the you know packaged up securities it tends to be traditional banks and it may be that a bank since they've run since since that particular service ran into some problems recently it may be that a major bank plays a larger role in providing equity or taking it over in the future so i i worry about the peer-to-peer model because i think it's awfully difficult to evaluate credit risk and i worry about the ability of people who don't have particularly good training in that area or a track record in that area of becoming involved thank you professor krueger for spending this afternoon with us and thank you very much to you all for staying with us enjoy the rest of the festival thank you you