When Gig Workers No Longer Gig: The Impact of California Assembly Bill 5 on the Online Labor Market

The rapid growth of the gig economy has intensified debates over how to classify workers. California’s Assembly Bill 5 (AB5) reclassifies many independent contractors as employees, yet its practical effects on gig workers remain unclear. Using data from a major online labor platform and a difference-in-differences design, we provide one of the first empirical assessments of AB5’s impact on workers’ earnings. We find that California gig workers’ monthly earnings rose relative to workers in other states, but this increase was driven by longer working hours, offsetting a drop in hourly pay. These results highlight the complex trade-offs of reclassification: although workers may gain access to employee benefits, they may also experience reduced hourly rates and increased workloads. For policymakers, our findings offer evidence to guide similar initiatives under consideration in other states and underscore the need for nuanced, context-sensitive regulation. For platform managers, the results suggest opportunities to align platform design and worker education with evolving labor laws to support compliance and sustainable growth. Together, these insights inform future policy and platform strategies aimed at balancing worker protection with flexibility in the gig economy.

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Publication Details

Journal
Information Systems Research
Published
2025-10-15
DOI
https://doi.org/10.1287/isre.2023.0007
Primary Topic
Digital Economy and Work Transformation
Type
article
Field-Weighted Citation Impact
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article

When Gig Workers No Longer Gig: The Impact of California Assembly Bill 5 on the Online Labor Market

Xunyi Wang, Wencui Han, Liangfei Qiu, Yu-Wei Lin
Information Systems Research
Digital Economy and Work Transformation
article

When Gig Workers No Longer Gig: The Impact of California Assembly Bill 5 on the Online Labor Market

Xunyi Wang, Wencui Han, Liangfei Qiu, Yu-Wei Lin
article en

Abstract

The rapid growth of the gig economy has intensified debates over how to classify workers. California’s Assembly Bill 5 (AB5) reclassifies many independent contractors as employees, yet its practical effects on gig workers remain unclear. Using data from a major online labor platform and a difference-in-differences design, we provide one of the first empirical assessments of AB5’s impact on workers’ earnings. We find that California gig workers’ monthly earnings rose relative to workers in other states, but this increase was driven by longer working hours, offsetting a drop in hourly pay. These results highlight the complex trade-offs of reclassification: although workers may gain access to employee benefits, they may also experience reduced hourly rates and increased workloads. For policymakers, our findings offer evidence to guide similar initiatives under consideration in other states and underscore the need for nuanced, context-sensitive regulation. For platform managers, the results suggest opportunities to align platform design and worker education with evolving labor laws to support compliance and sustainable growth. Together, these insights inform future policy and platform strategies aimed at balancing worker protection with flexibility in the gig economy.

Information Systems Research
Baylor University (US), Santa Clara University (US), University of Florida (US), Stony Brook University (US)
Openalex Percentile: Top 61%
Digital Economy and Work Transformation
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When Gig Workers No Longer Gig: The Impact of California Assembly Bill 5 on the Online Labor Market — Xunyi Wang, Wencui Han, et al. · Information Systems Research (2025) | TGRS Research Map | TGRS