Gig Economy

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Peer Reviewed

Gig Economy

This is a peer-reviewed entry published in Encyclopedia Journal, full entry can be found at 10.3390/encyclopedia5040204

This entry presents the history, geography, business, regulations, and the roles of gig workers, platform/algorithms, and employers, focusing primarily on the USA and the EU. The gig economy is informally referred to also as the fourth industrial revolution or the 1099 economy, emphasising sharing, freelance, or platform work; it is a complex and changing business model and regulatory environment. In practice, the gig economy refers to a tripartite relation between workers, platforms/apps, and employers, leading to a two-sided market, where algorithms match supply and demand for paid labour and clients. It is only recently that the gig economy has started to be conceptualised, and its implications, challenges, and impacts are captured in economic law and society, including the power dynamics related to the interplay between economics, technology, regulation, and communities. Conceptually, the gig economy is important, as small paid work has always been present in society for all types of workers and beneficiaries. This new business model of on-demand work has some perceived advantages, such as freedom of work, under-regulation, efficient use of capital, driving down costs, and improving services. However, there is a dualisation of anti-power between workers and non-employers that may lead to precarious work, less free workers, and shadow corporations that distort the market using game changers like digital management algorithms. Currently, the size of the gig economy comprises 154–435 million gig workers out of the world’s 3.63 bn workers, with a market size of USD 557 bn, and is still expanding.

gig economy platform work independent workers platform algorithms digital management

The gig economy, also referred to as the fourth industrial revolution, 1099 economy, on-demand economy, app economy, platform capitalism, or platform work, with built-in algorithmic management tools, is described by short-term tasks and the lack of a common workspace. It involves three types of market participants—workers, beneficiaries, and digital platforms—the latter of which facilitate communication via secure channels ^[1].

Accordingly, the gig economy consists of a tripartite relation between workers, platforms/apps, and employers, leading to a two-sided market where algorithms match supply and demand for paid labour and employers. Workers are colloquially known as freelancers who undertake work by choice, ranging from task-related jobs for decentralised beneficiaries, varying from food delivery and housework to online professional consulting or asset sharing, like renting an apartment. The platform/app intermediary matching algorithm performs its part to keep the market running. Beneficiaries are companies or persons who pay for the work received. Interestingly, some market participants in the gig economy can be registered as both freelancers and clients, oscillating between the two roles, leading, in a way, to prosumers ^[2].

There are four sectors in which the gig economy normally activates: asset sharing services, like home sharing and car sharing, with platforms like Airbnb; transport-based services, like ride sharing, Uber, and Blabla Car; professional services, such as business work, micro-tasking, writing services, and freelancing platforms like Upwork and Fiverr; and handmade goods and home services, such as babysitting, tutoring, Care.com, and Etsy ^[3].

This new business model of on-demand work has some perceived advantages, such as freedom of work, under-regulation, efficient use of capital, driving down costs, and improving services. However, there is a dualisation of anti-power between workers and employers, leading to a third business driver, namely, platforms. This situation may lead to precarious work and big non-employer entities that distort the market by challenging traditional market rules, introducing new types of market players, and altering the business landscape via digital management algorithms ^[4].

It is important to conceptualise the gig economy regardless of its form, as small paid work has always been present in society for all types of workers, including high-skilled or low-skilled individuals and all sorts of beneficiaries, natural persons, or companies. However, it is only recently that the gig economy has started to become a conceptualised phenomenon, considering its implications, challenges, and impact on the economy, law, and society.

Despite being a large umbrella concept, gig economy businesses are not a one-size-fits-all concept. It can be generally argued that platform work is a part of the gig economy, though the relationship between the two is more complex. The literature uses the terms interchangeably with certain differentiations in terms of work characteristics, work management, and motivations. The focal point can be the worker, the mediating platform, the employers, or the sharing part, prompting scholars to develop different terms to define the gig economy in a targeted way ^[5].

Furthermore, different countries highlight specific nuances of the gig economy according to the local culture, local understanding of the phenomenon, and specific challenges and needs. While there are various classifications, including misclassifications and non-classifications, the gig economy and its variations focus on the same theme, forming a classification of its own that does not fit neatly into traditional boxes ^[6].

For instance, the European Union (Directive 2024/2831) ^[7] put forward the following characterisation, addressing platform work and not gig economy: “work organised through a digital labour platform and performed in the Union by an individual on the basis of a contractual relationship between the digital labour platform or an intermediary, and the individual, irrespective of whether there is a contractual relationship between the individual or an intermediary and the recipient of the service”.

In parallel, in the USA, legislation concentrated on gig economy terminology in a rather cross-sectional way, covering worker classification, benefits, and algorithmic transparency, with some states like California’s Assembly Bill 5 addressing it in a more specific way, generating certain resistance at the time it was proposed ^[8]. The Gig Economy Act of 2025 was created “to protect the gig economy and small businesses that operate in large part through contractor services from the threat of costly class action litigation, and for other purposes” ^[9], preserving the status quo in many ways.

A less legal, yet comprehensive, definition can be found in the Cambridge Dictionary (2020) ^[10] where the gig economy is “a way of working that is based on people having temporary jobs or doing separate pieces of work, each paid separately, rather than working for an employer”.

Academically, scholars like Laín ^[11] have highlighted the informative value of these multifaceted characterisations; however, despite their accuracy, the diversity of the economic phenomenon captured in different frameworks, like pragmatism or more analytical explanations, makes common usage of the gig economy colloquially understandable but conceptually weak, with different benchmarks and methodologies. The variance is so large that the gig economy can be considered either as more inclusive capitalism or part of a post-capitalist economy, according to the different weights assigned to nature, money, and labour power.

Currently, there are some risks associated with the future of the gig economy, such as a new type of materialism that is post-humanist and ethical concerns about worker protection, as autonomous human subjects may lose agency to technological factors, by choice, under governmental regulation ^[6]. The gig economy is considered by some scholars to be the next step in the capitalist process and a capitalist mode of production based on the financialisation of big data, with new technologies, business models, organisational forms, governance, jobs, skills, and modes of capital accumulation. Srnicek ^[1] argues that platform capitalism “will be forced either to develop novel means of extracting a surplus from the general economic pie or to fold their expansive cross-subsidising monopolies into much more traditional business forms”, meaning that, eventually, the gig economy will become business as usual, connecting also to new technologies, climate change, etc.

According to some views, the gig economy can be seen as an advancement in the neo-liberal capitalist agenda; however, considering leftist views, the gig economy is just another way of value extraction, regardless of whether it is supported by normative politics. Regardless, the gig economy should be analysed using an institutional approach due to its size, considering market efficiency (peer-to-peer efficiency).

References

Srnicek, N. Platform Capitalism; Polity Press: Cambridge, UK, 2017.
Ertz, M.; Maravilla, J.; Cao, X. Prosumer: A new approach to conceptualisation. J. Innov. Knowl. 2025, 10, 100653.
Britannica. Gig Economy. Available online: https://www.britannica.com/procon/gig-economy-debate (accessed on 5 November 2025).
Hickson, J. Freedom, domination and the gig economy. New Polit. Econ. 2023, 29, 321–336.
Gussek, L.; Wiesche, M. The gig economy: Workers, work and platform perspective. In Proceedings of Wirtschaftsinformatik 2022; AIS Electronic Library: Nürnberg, Germany, 2022; Available online: https://aisel.aisnet.org/wi2022/digital_markets/digital_markets/1 (accessed on 10 October 2025).
Lobel, O. The Gig Economy & the Future of Employment and Labour Law. Univ. San Francisco Law Rev. 2016, 51, 1–15. Available online: https://ssrn.com/abstract=2848456 (accessed on 20 September 2025).
The European Union (Directive 2024/2831). Directive on improving working conditions in platform work. In Official Journal of the European Union; European Sources Online, Cardiff University: Cardiff, UK, 2024; Available online: https://www.europeansources.info/record/proposal-for-a-directive-on-improving-working-conditions-in-platform-work/ (accessed on 4 September 2025).
ABC Legal. California Gig Workers: What You Need to Know. Available online: https://www.abclegal.com/blog/california-gig-workers-what-you-need-know (accessed on 2 September 2025).
GovTrack.us. H.R. 1882: Saving Gig Economy Taxpayers Act. Available online: https://www.govtrack.us/congress/bills/119/hr1882 (accessed on 15 October 2025).
Cambridge Dictionary. Gig. Available online: https://dictionary.cambridge.org/dictionary/english/gig (accessed on 4 November 2025).
Laín, B. Addressing the Sharing Economy—Some (Potential) Inconsistencies of Its Emancipatory Defense. Philosophies 2024, 9, 180.

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Online Date: 08 Dec 2025

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