Gig work as a supplemental income source and its impact on household consumption: a structural equation modelling approach

Purpose The gig economy has revolutionised supplemental income opportunities, yet its impact on household consumption remains underexplored. This study aims to examine how gig work as a supplemental income source influences household consumption patterns (HCPs) among urban gig workers in Bengaluru, India; evaluate the mediating role of perceived financial stability (PFS) in translating gig income into key consumption outcomes; and empirically test these relationships using structural equation modelling (SEM). Drawing on the permanent income hypothesis (Friedman, 1957) and financial well-being literature (Netemeyer et al., 2018), the authors hypothesise direct and indirect effects across constructs: gig work as supplemental income (GWSI), PFS, HCP, discretionary consumption (DC), savings propensity (SP) and consumption diversification (CD). Design/methodology/approach A quantitative research design was adopted using survey data collected from 400 gig workers in Bengaluru, India, through a structured questionnaire measured on a five-point Likert scale. Exploratory factor analysis (EFA) identified the underlying constructs, while confirmatory factor analysis (CFA) validated the measurement model. SEM was used to test hypothesised relationships, and bootstrapping techniques were used to examine mediation effects. Findings EFA confirmed a six-factor structure, while CFA validated the measurement model with excellent fit indices (χ²/df = 0.97, RMSEA = 0.072, CFI = 0.953). The structural model supported all hypotheses (p < 0.001), with GWSI positively affecting PFS (ββ = 0.757) and PFS influencing HCP (β = 0.785), SP (β = 0.721), CD (β = 0.632) and DC (β = 0.514). Bootstrapping mediation analysis revealed significant partial mediation effects. Findings underscore PFS as a key mechanism translating gig income into enhanced consumption outcomes, aligning with behavioural finance theories. Originality/value This study contributes to the gig economy and consumption literature by empirically linking supplemental gig income to household consumption behaviour through PFS. By integrating economic theory with behavioural finance perspectives in an emerging economy context, the research offers novel insights into micro-level consumption dynamics and provides policy-relevant evidence for designing financial literacy and social protection initiatives for gig workers.