“We don't need no (higher) education” - How the gig economy challenges the education-income paradigm

• Published in: Technological forecasting & social change 2023-01, Vol.186, p.122136, Article 122136
• Main Authors: Herrmann, Andrea M., Zaal, Petra M., Chappin, Maryse M.H., Schemmann, Brita, Lühmann, Amelie
• Format: Article
• Language: English
• Subjects: Adverse selection; Education; Gig economy; Income; Online labour market
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2022.122136

The empirical relationship between educational attainment and pay levels has been widely acknowledged in the labour-economic and labour-sociology literatures. While the causalities underlying this relationship are not conclusively established, researchers broadly agree that higher educational attainment leads to higher income levels in dependent employment, temporary hiring, and freelancing alike. The ‘gig economy’, where workers complete jobs mediated by online platforms, challenges this paradigm as gig workers can access jobs without any educational certificates. Building a theoretical framework based on agency-driven accounts, we investigate whether we can empirically observe a relationship between educational attainment and wage levels in the gig economy. Our OLS regression analyses of 1607 gig workers in 14 Western economies illustrate no statistically significant correlation. Instead, the platform's review system as well as the gig workers' level of previous job experience serve as the major signalling mechanisms that help to reduce information asymmetry. Qualitative insights gained from in-depth interviews explain this finding by revealing how gig workers gain the necessary qualifications for their jobs, most importantly, through self-study, learning-by-doing, and trial-and-error processes. Our findings therefore point out that advanced educational credentials are only of limited use for gig workers. •Higher educational degrees do not lead to higher hourly wages of online gig workers.•High ratings and relevant work experience lead to higher hourly gig wages.•Female gig workers request significantly lower hourly wages than male gig workers.•Gig workers often acquire the necessary skills through autodidactic learning.•Higher education is hardly important for providing the necessary gig skills.