A recent study published in Psychological Science shows that the way today's sharing economy is constructed causes the value of labor to decline. A decline in the value of labor increases economic inequality.
Researchers Dr. Amos Schurr from the Department of Business Administration at the Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, and Prof. Ilana Ritov of the Hebrew University of Jerusalem explain their findings in their study – Transaction Frame Determines Preferences: Valuation of Labor by Employee and Contractor: "There is a lack of symmetry in the way we perceive gains (profits) and losses. This assymmetry, called loss aversion, explains, for example, why the same product is valued differently by buyers and sellers. For example, a person who sells a product such as a necklace, ring or an old picture usually requires a higher price than the price the buyer is willing to pay. Under the loss aversion principle, the seller requires a high price because he values the transaction from a loss perspective. The buyer is willing to pay a low price because he values the transaction from a gain perspective.
The principle of loss aversion can also be applied to work (labor) - the employee (driver of a taxi company or courier company) sells the shuttle or freight services while the employer (the owner of a taxi company or a courier company) earns the job. According to loss aversion, the employee who assesses the job from a loss perspective thinks he deserves higher pay than the employer is willing to pay.
In today's sharing economy, however, the parties' perspectives in terms of gains and losses are reversed because the market structure is different than that of a conventional economy. In this market, work is often done through labor contracts. The employee buys the labor contract (for example, the taxi driver pays for the right to drive passengers, or a delivery person envoy pays commission for the delivery rights) while the "employer" sells the labor contract. This difference in perspective, plus the fact that the value of the work is derived from the price of the labor contract, leads to a decrease in the value of the work, thereby increasing inequality. In other words, financially the same job will be valued as less when done under conditions of sharing economics.
"The study has far-reaching implications with regard to increasing economic inequality," say the researchers, "in times like now of economic crisis and soaring unemployment."
“In the reality of the shift to the new sharing economy," concludes Dr. Schurr, "the gaps between the rich and the poor will continue to climb."
