The Rise of Riders: Digital Platforms,Targeted Matching, and Job Creation

Xu Heng*1, Yu Yunjun2, Zhang Yilin3

1 China University of Political Science and Law (CUPL), Beijing, China

2 Zhongnan University of Economics and Law (ZUEL), Wuhan, China

3 Sun Yat-sen University (SYSU), Guangzhou, China

Abstract: In recent years, gig economy jobs—particularly those of food delivery and ridehailingdrivers—have rapidly emerged as a significant force in the labor market, reflectingthe deep integration of China’s digital and real economies. This paper examines how digitalplatforms that support the gig economy exercise directionality and dominance in labormatching, where the platform dictates which consumers workers serve, rather than allowingindependent choice. While this platform-led matching may appear to limit consumer andworker autonomy, it actually arises from the platform’s central role in information flow andits technological capabilities, serving as a foundation for the platform’s ability to createlarge-scale employment through cross-side network effects. Using a theoretical modelthat integrates digital platforms, labor markets, and product markets, the paper exploreshow the efficiency of targeted matching affects employment creation. In the early stagesof gig economy development, when targeted matching efficiency is low, improvements inassignment efficiency lead to a net increase in gig employment, worker income, and overallsocial welfare. However, in the later stages, as targeted matching efficiency improves, thepotential for monopoly abuse by incumbent platforms may trigger a crowding-out effect,leading to unemployment, income inequality between platforms and workers, and highercommission fees. While fostering competition within platform markets offers benefits,policymakers should avoid excessively low entry barriers, as these can negatively impactincumbent platforms’ decisions regarding labor, pricing, and technology investment.

Keywords: Gig economy; digital-real integration; platform regulation; competitive

JEL Classification Codes: L20, L86

DOI: 10.19602/j.chinaeconomist.2025.03.05