David R. Henderson  

Male Uber Drivers Earn More and It's Not Due to Discrimination

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The growth of the "gig" economy generates worker flexibility that, some have speculated, will favor women. We explore one facet of the gig economy by examining labor supply choices and earnings among more than a million rideshare drivers on Uber in the U.S. Perhaps most surprisingly, we find that there is a roughly 7% gender earnings gap amongst drivers. The uniqueness of our data--knowing exactly the production and compensation functions--permits us to completely unpack the underlying determinants of the gender earnings gap. We find that the entire gender gap is caused by three factors: experience on the platform (learning-by-doing), preferences over where/when to work, and preferences for driving speed. This suggests that, as the gig economy grows and brings more flexibility in employment, women's relatively high opportunity cost of non-paid-work time and gender-based preference differences can perpetuate a gender earnings gap even in the absence of discrimination.
This is the abstract of Cody Cook, Rebecca Diamond, Jonathan Hall, John A. List, and Paul Oyer, "The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers," January 2018.

Cook and Hall are at Uber Technologies, Inc. Diamond and Oyer are at Stanford University's Graduate School of Business and NBER. List is at the University of Chicago, NBER, and Uber Technologies, Inc.

Here's what they did and why the data were so good for seeing if there is a systematic pay gap in the absence of discrimination:

In this paper, we make use of a sample of over a million drivers to quantify the determinants of the gender earnings gap in one of the largest gig economy platforms: Uber's platform for connecting riders and drivers. Uber set its driver fares and fees through a simple, publicly available formula, which is invariant between drivers. Further, similar to many parts of the larger gig economy, on Uber there is no negotiation of earnings, earnings are not directly tied to tenure or hours worked per week, and we can demonstrate that customer-side discrimination is not materially important. These job attributes explicitly rule out the possibility of a "job-flexibility penalty." We use granular data on drivers and their behaviors in a given hour of the week to precisely measure driver productivity and returns to experience.

Here's the gap and here's why it exists:
We find that men earn roughly 7% more per hour than women on average, which is in line with prior estimates of gender earnings gaps within specifically defined jobs (Bayard et al. (2003), Barth et al. (2017)). We can explain the entire gap with three factors. First, through the logic of compensating differentials, hourly earnings on Uber vary predictably by location and time of week, and men tend to drive in more lucrative locations. The second factor is work experience. Even in the relatively simple production of a passenger's ride, past experience is valuable for drivers. A driver with more than 2,500 lifetime trips completed earns 14% more per hour than a driver who has completed fewer than 100 trips in her time on the platform, in part because she learn where to drive, when to drive, and how to strategically cancel and accept trips. Male drivers accumulate more experience than women by driving more each week and being less likely to stop driving with Uber. Because of these returns to experience and because the typical male Uber driver has more experience than the typical female--putting them higher on the learning curve--men earn more money per hour.

And their conclusion for the economy at large:
Gig economy work is often substantially differentiated from traditional jobs: individuals have more flexibility, are often paid according to a fixed contract, and retain greater control over their earnings. Despite these differences, we show that--much like with traditional jobs--there is a gender pay gap. However, unlike earlier studies, we are able to completely explain the pay gap with three main factors related to driver preferences and learning: returns to experience, a pay premium for faster driving, and preferences for where to drive. Indeed, the contribution of the return to experience to gender earnings gaps has not gotten much attention in previous empirical literature, as it is often quite difficult to measure in traditional work settings. We find that even tracking the number of weeks worked--a common proxy for experience in the literature--does not accurately quantify experience, as men work more hours per week than women and thus accumulate experience more quickly. These results suggest that the role of on-the-job learning may contribute to the gender earnings gap more broadly in the economy than previously thought.

Overall, our results suggest that, even in the gender-blind, transactional, flexible environment of the gig economy, gender-based preferences (especially the value of time not spent at paid work and, for drivers, preferences for driving speed) can open gender earnings gaps. The preference differences that contribute to pay differences in professional markets for lawyers and MBA's also lead to earnings gaps for drivers on Uber, suggesting they are pervasive across the skill distribution and whether in the traditional or gig workplace.


I came across this study in a Freakonomics interview of three of the authors: List, Diamond, and Hall.

One segment of the interview at best puzzled me and at worst disturbed me:

DUBNER : So a 7 percent gap, how does that compare to the best research in other occupations?
DIAMOND: So there's been some previous work that has looked at within-firm gender pay gaps. And seven percent is not very different than the overall average we see across all firms, even in the traditional labor market.
LIST: Sadly so.

It's List's "Sadly so" response. Why is it sad? I wondered if he was being ironic or humorous and so I went to that part of the interview and listened for tone. It seemed to be real sadness.

But why? Indeed, I had the exact opposite reaction. I don't favor discrimination against women just because they're women. I want people to paid according to their productivity. And the data show that they are. That shouldn't be grounds for sadness. Moreover, the authors, in the conclusion I quote above, say that maybe the wage differentials in the overall labor market have little to do with discrimination. Again, grounds for happiness, not sadness.


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CATEGORIES: Labor Market




COMMENTS (24 to date)
Mark writes:

Perhaps List entirely missed the potential implication that, if an earnings gap comparable in size to the gap in traditional occupations can be explained in Uber entirely by non-discriminatory factors in a well-controlled experiment, then it is likely that even the unexplained earnings gap is attributable to factors other than discrimination.

Of course, it’s also the case that these days, curiously, almost nothing upsets someone more than trying to inform them that they’re not actually oppressed.

David R Henderson writes:

@Mark,
Perhaps List entirely missed the potential implication that, if an earnings gap comparable in size to the gap in traditional occupations can be explained in Uber entirely by non-discriminatory factors in a well-controlled experiment, then it is likely that even the unexplained earnings gap is attributable to factors other than discrimination.
Not if he read the conclusion to his own paper.

Captain Obvious writes:

Mark, obviously, the uber app is set up to negate discrimination on the supply side and measure it on the demand side. So to even compare this to other settings and make the general result that you are trying to male from their paper is not right.

David, you should read their epigraph. It is clear List and the broader literature hopes that when we got rid of convexities and discrimination that the flexibility aspect would lead to zero gap. When it doesn't it is sad.

List later says: it is a mixture of constraints and preferences. So he obviously gets what is happening more than anyone.

David R Henderson writes:

@Captain Obvious,
Mark, obviously, the uber app is set up to negate discrimination on the supply side and measure it on the demand side. So to even compare this to other settings and make the general result that you are trying to male [sic] from their paper is not right.
But it’s what the authors themselves come very close to saying. Look at the last paragraph I quoted from them.
David, you should read their epigraph. It is clear List and the broader literature hopes that when we got rid of convexities and discrimination that the flexibility aspect would lead to zero gap. When it doesn't it is sad.
I still don’t get why it’s sad. It seems as if equality is the holy grail here and I don’t see why.

Mark writes:

"Mark, obviously, the uber app is set up to negate discrimination on the supply side and measure it on the demand side. So to even compare this to other settings and make the general result that you are trying to male from their paper is not right."

Why though? What explains the earnings difference between men and women in the case of Uber drivers (greater willingness on average to work longer hours, during surge times/holidays, weekends; accumulation of more work experience experience; tendency to work longer within a given occupation) apply to other fields as well, and is there any reason to expect that the premium for such characteristics (accruing more experience, working weekends/holidays, etc.) as a percentage of pay would be significantly lower for other occupations? Indeed, the fact that the pay disparity is so similar among Uber drivers to that of other occupations seems to suggest they may be quite similar. The main difference of Uber drivers seems to be that these factors are easier to measure. Why wouldn't the observations generalize, at least to some extent, to other occupations?

Stephen writes:

I certainly think that it's nice to see indication that direct discrimination isn't to blame for the pay gap.

It still seems to me that there is a decent chance that discriminative pressures are making women less likely to work as many hours, though. Expectations that women should be in the home, that women are more likely to be single parents, etc. might explain some of the lower hours worked, compared to men. This then leads to less experience, widening the pay gap.

I'm not sure there's anything to be done about it, since, of course a company would preferentially hire, or compensate highly, someone with more experience. The gender pay gap discussion is definitely more complicated than just the question of direct discrimination, though.

Duncan Earley writes:

At the end of the day the issue is women are more likely to have time off to raise children both at birth in one chunk and later in reduced work hours to handle schooling.

I dont know how to solve that other than seemingly over reaching laws such as forcing extended leave for dads after birth or forcing dads to pick up or drop off the kids from school.

Mark writes:

Stephen,

Much of these discriminatory pressures are, of course, biological: the fact that women alone can birth children and nurse infants being the main issue. I'm not sure that can be called discrimination, unless nature is the discriminator.

Also, to the extent that it is 'indirect discrimination', one could just as well alternatively characterize it as men being pressured by social norms (or court orders) into working more hours (and taking on greater health risks, contributing to the life expectancy gap) in order to support their wives and children.

Stephen writes:

-Duncan

I dont know how to solve that other than seemingly over reaching laws such as forcing extended leave for dads after birth or forcing dads to pick up or drop off the kids from school.

Me neither. Just thinking through it.

-Mark

Much of these discriminatory pressures are, of course, biological: the fact that women alone can birth children and nurse infants being the main issue. I'm not sure that can be called discrimination, unless nature is the discriminator.

Also, to the extent that it is 'indirect discrimination', one could just as well alternatively characterize it as men being pressured by social norms (or court orders) into working more hours (and taking on greater health risks, contributing to the life expectancy gap) in order to support their wives and children.

Great points, and I completely agree. I wouldn't take this position but - for the sake of discussion - some would say that women do a societal good by taking time to raise children (even if it is a biological pressure), and that there should be legal/financial structures in place to offset the wage penalty they incur from reducing their time in the workforce for kids.

RPLong writes:

Although probably uncommon in the academic literature -- and for good reason -- something that often helps illustrate a point found in aggregate data is presenting individual examples.

If I had done an analysis like this for Uber Inc., I would have included some row-level examples of female drivers who had a "typically male-driver profile" in terms of speed and experience to highlight that, indeed, women who drive this way are compensated equally to men. I'd then include the reverse: males who drive more like females and are compensated accordingly.

While such examples can be seen as anecdotal, I think they really drive (ha! pun intended) the point home.

Dave Adsit writes:

To your original question, I can see a few reasons why the author might find the results to be sad (though I do not share that sentiment):

1. They had a hypothesis, one with a significant amount of popular support, that was not supported by their own data. I can imagine this is not just disappointing, but sad for them.

2. Because the data does not support the hypothesis that the gender pay gap is a result of bias or prejudice (in this case,) there is no direct policy implication either inside Uber or in the broader culture that is not itself a direct and obvious violation of quality (of opportunity.)

3. The results of this study could be used to justify outcomes that are, in fact, due to bias or prejudice by offering the excuse that even in a completely gender-blind system, male employees outperform female employees by an expected amount.

drobviousso writes:

Prof. Henrson - I take it that you were happy because this paper shows that Uber drivers have equality of opportunity. List, I take it, is hoping to see equality of outcomes.

That's the most simple explanation, and the elephant in the room any time the pay gap is discussed.

jj writes:

I think it's rather mysogenistic of List to imply that men's preferences are superior to women's preferences. Why doesn't he celebrate the fact that, at least with Uber, men and women are all individually free to follow their own path?

Brandon A writes:

This speculation -- that traditionally gender-uneven familial obligations are what's driving the difference in behavior -- is falsifiable.

Given that the researchers are working with Uber, they could conduct a poll within the app to figure out which women drivers are single and childless. We could then look to see how this population differs from the all-male population.

My suspicion is that women Uber drivers skew more single and childless than the general population, and that they'll have less of an earnings gap than the average woman driver in this study.

Tangentially related, I wish the authors had included distributions of hourly earnings. Even without data on which women have families, this would let us see if there is a sizable amount of women that don't experience a wage gap.

David Seltzer writes:

If in fact women are more risk averse than men, lot of empirical work both pro and con, then male Uber drivers receive a premium for assuming risk.
On average, are men more likely to pick up in more dangerous areas than women? If so, that would explain some of the earnings differential. It also seems reasonable, women are more cautious when picking up men, given their concerns about harassment or worse.

Christy Stadelmaier writes:

This study gives lie to all the bs spread about this topic, it is ALL about "choices." I heard a female uber driver talk about maximizing income...very smart female, bet she experiences no gender pay gap. It is even a "choice" to have children.

bill steigerwald writes:

David -- In an addition to be an exposer of the lies of John Steinbeck (Dogging Steinbeck) and the re-teller of Pittsburgh's greatest journalist's undercover mission into the 1948 Jim Crow South (30 Days a Black Man), I am an Uber driver in Pittsburgh with 3600-plus trips since January of 2015. I'm not going to comment on the economics stuff here. My knowledge of that subject, while vast for a journalist, is limited to Bastiat's essays. I'd argue that the 7 percent male-female difference in earnings, if an accurate measurement, is not worth worrying about unless you are an unrealistic equality seeker. Based on my real-world experience working surges, holidays and Saturday nights till 2 in Pittsburgh's densest bar scene, I'd guess (posit?) that the disparity, if real, is in great part based on all the usual reasons you mention about working longer hours, smarter times and places, etc. But more likely, I'd suspect that earnings gap is a reflection of the fact that few women want to put up the with BS and madness of young drunk males (and females) at 2 am on a Friday or Saturday to earn 30 or even 40 bucks an hour instead of, say, the reliable $20 an hour you can make carrying sober people in early evenings. Now I work 10 or 12 hours a week (the Uber driver average, by the way) and gross about $200 a week. I don't have to work 24 hours a week and work late nights, when 99 percent of bad things happen. As I say, I now take future drunks out to the bars and let my braver, more desperate colleagues bring them home. In other words: I bet female drivers work far fewer late night surges than males; in fact, I'd bet my copy of "Human Action" that it's the cause of any disparity. lastly, the criterion of "higher speed" as one of the roads to higher earning seems to me pretty lame; I think once I have had drive like a demon to the airport; Uber (and Lyft) riders are not interested in death rides but safe rides. Also, the idea that women Uber drivers are likely to be slowpokes is kinda sexist, ain't it? Finally: I have had a great time as an Uber driver. In 1994 I wrote a gigantic two-part, Page 1, 400 column inch (that's long) "expose" of Pittsburgh's horrible Yellow Cab Co., the typical monopoly franchise that had been torturing Pittsburghers for half a century. The taxis were junk, the service sucked unless you wanted to go the airport, the fares were high, and the drivers refused to go into black neighborhoods (served by illegal jitneys, who invented Uber with cash, pay phones and ride-sharing). Allegheny County's 1.3 million poor souls (where Pittsburgh is) were "served" by 300 cabs. We showed how awful Pittsburgh's Yellow Cab was -- not hard to do -- and declared Pittsburgh to be North America's worst cab town. As a practicing libertarian subversive, I made a point to quote ex-cabbie Walter Williams. Nothing changed in Pittsburgh until 2014 when Uber came to town and transformed the city with its micro-transit. the poor, the carless, the DUI-fearing suburbanite and especially young women, have been forever liberated from taxi tyranny. If Pittsburgh gets Amazon's eastern HQs, Uber will get a bit of credit for making Pittsburgh more livable and loveble.

Duncan Earley writes:

Just wanted to revisit this as I think it is very profound.

So if I have understood the study correctly the pay gap is not due to any of these:
- Discrimination. Riders don’t show any preference for gender.
- Sexual harassment. They check for this in reasons for quitting.
- Need for flexible working hours. Being an Uber drive is the MOST flexible job.
- Working at best times. The study says women actually work most at the best time, Sunday afternoon.

The pay gap seems to have only two factors:
- Number of hours driven, i.e. experience
- Men drive slightly faster than women (avg 19mph vs 18mph so not speeding).

I wonder if even the fact than men drive a bit faster is also related to experience. So basically men get paid a bit more because they get more experience because they don’t need to take time off to look after the kids or pick them up from

Duncan Earley writes:

Missed last bit on previous comment?

pick them up from school or take the sick mother-in-law to hospital. I don’t know how we can fix that with policy.

Hazel Meade writes:

I dont know how to solve that other than seemingly over reaching laws such as forcing extended leave for dads after birth or forcing dads to pick up or drop off the kids from school.

A) we could have schools that kept hours amenable to working people - 8:30 AM - 5:30 PM perhaps. Amusingly the mostly private day-care market is far more flexible in this respect - at least the larger commercial daycare chains.
B) We could have standards for child "neglect" that allowed parents to let their children walk home and let themselves in.
C) We could have on-site daycare at corporate offices, at least those large enough to sustain it. Those daycares could operate late into the evening to allow people to work overtime.

David Seltzer writes:

Bill Steigerwald, Great post. I know of where you speak re taxis in the Burgh. I lived in Mt. Lebanon for nearly a year. Took the Trolley often to avoid the cabs. I hadn't thought about women not wanting to pick up drunks at midnight on friday. I too am a subversive libertarian.

Duncan Earley writes:

@Hazel Meade. You post makes me think even deeper on this. Maybe its not just about the kids. I wonder if the 7% gap appears for women without children or young women vs young men ...say just look at drivers who are 18 to 20 years old.

If there is no gap then it is just the kid factor. If there is a gap then something else is going on. Would be interesting.

Mark writes:

Duncan Early,

"If there is no gap then it is just the kid factor. If there is a gap then something else is going on. Would be interesting."

It is, of course, theoretically possible that employers know that some fraction of their female laborers will have kids and take time off but, since they cannot discriminate on the basis of whether one expects to have children, they spread the expected cost of employing potential mothers (i.e., potentially pre-menopausal women) across all members of that class. If you know one class of people is more likely than another to do something that will reduce their productivity, a rational employer unconstrained by law or social norms would pay them less to account for that. In other words, they would be "rationally sexist," offensive though one may find that concept. Conversely, I've heard it argued that female investment bankers get paid more than male ones because they tend to be more risk averse in their decisions. If true this would represent a similar phenomenon.

What would be interesting, I think, would be to see if there's a gap between older women and older men, all else equal, as the hypothetical reduced expected productivity due to potential motherhood would be absent for post-menopausal women.

Steve S writes:

"men tend to drive in more lucrative locations"

Just to play devil's advocate - are the more lucrative locations/times also the more dangerous ones? The crowded bar area in a city from 10pm-3am on weekends? I wouldn't quite call that discrimination (as I can't imagine new laws that could correct this problem) but couldn't that be sort of a soft barrier to higher pay? That women are afraid of being assaulted and thus stay away from the most lucrative areas? If "society" were more genteel, these safety concerns would be more gender-blind.

The real answer is probably that this is just revealed preference. Women prefer more security and safety to higher wages, whereas men take more risk for higher wages. But one might wonder...

It's probably buried somewhere in the data whether this is even a contributor to the wage gap or not.

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