The innovation-employment nexus: an analysis of the impact of Airbnb on hotel employment

Purpose The purpose of this paper is to examine the impacts of Airbnb on hotel employment. Design/methodology/approach A triple-difference regression framework was used to compare changes in hotel employment in three cities in South Africa where Airbnb started operating relative to cities without this home-sharing platform. Data on hotel employment was drawn from the survey on hotel service conducted by Smith Travel Research whereas the data on Airbnb's listings was drawn from the Airbnb's homepage for the period between July 2015 and December 2018. The analysis was restricted to 792 hotels. Findings Although prior studies have showed that Airbnb has an adverse impact on hotel performances, the findings show that total hotel employment expanded after the entry of Airbnb, accompanied by a marked relative shift towards self-employment. Airbnb supply negatively affected permanent employment, which was compensated by increase in temporary employment and self-employment. While the paper finds no evidence of adverse employment impacts, the hourly earnings declined for hotel employees were compensated by increase in income among self-employed Airbnb hosts. Although these findings might be contradictory to the general conjecture, such evidence calls for a comprehensive investigation of Airbnb's overall economic impact. Research limitations/implications First, the study was based on the impact of Airbnb on hotel employment in South Africa. Caution is therefore required when generalising the findings of this study in other geographic areas. Second, some variables that may affect employment have not been included in this study because of the unavailability of data. Practical implications The results show that the sharing economy plays an important role in solving the unemployment problem, particularly in South Africa, where there is a high rate of unemployment. More practical implications are further discussed. Originality/value To the best of author's knowledge, this paper provides the first systematic evidence of the impact of Airbnb on labour market outcomes in the hotel industry in South Africa.