Economic Benefits and Costs of Convenience in Gig
Economy – The Effects of Online Food Delivery on
Car Accidents and Unemployment Based on
Staggered Difference-in-Difference Methodology
Xiyue Tan
Wyoming Seminary
Zhengzhou, China
Kaiqi Shen
Wyoming Seminary
Ningbo, China
kqs0928@gmail.com
Abstract—This study examines the economic benefits and costs of
online food delivery resulting from the entry of two platforms:
Meituan and Eleme in China. In particular, we examine the extent
of the impact on road accidents statistics, death counts, and
unemployment rates caused by the emergence of platforms
mentioned above. We collect data from 18 cities in China from 2007
to 2019 and apply a staggered difference-in-difference methodology
in determining the causal effects. Difference-in-Difference
methodology is a method that is widely used in mathematics and
computer science area. It helps scholars to better mimic a social
science scenario in a more objective way by using equations and
data. We discover that the arrival of online delivery service caused
an average increase of 611 in the number of road accidents and 51
in death counts per city per year. We do not find any significant
effect on the unemployment rates. Based on these results, we run a
cost estimate of the annual costs of car accidents brought by the
entry of online food delivery services, and the costs sum up to
approximately 3.65 million CNY, equivalent to 531,651.44 USD per
city each year.
Keywords-Online food delivery, economic benefits, staggered
difference-in-difference methodology
I. INTRODUCTION
Food delivery has become an essential service in mainland
China, enabling people to order food and drink from
restaurants and to pick products from supermarkets by mobile
devices through different platforms. Due to the intense
competition in food delivery services, more than 20 platforms
have been closed (Sun, 2019). Nowadays, two major platforms
divide the market share: Eleme, supported by Alibaba, and
Meituan, backed by Tencent.
The two platforms bring great convenience to people’s lives
because they enable people to order food from numerous
restaurants by merely clicking a few buttons on their phone,
Runyu Liu
Wyoming Seminary
Beijing, China
2044861829@qq.com
without disturbing their routine work. Previous studies show
that China’s online food delivery industry reached a total
income of 653.6 billion CNY in 2019, an increase of 39.3%
compared to the one in 2018 (Shanghai First Financial Data
Technology Co., LTD, 2020). Specifically, statistics of
Meituan Waimai (food delivery) shows that tier 1, new tier 1,
and tier 2 cities are the primary market for delivery orders,
accounting for 64.7% of the total national order in 2019
(Shanghai First Financial Data Technology Co., LTD, 2020).
Furthermore, the entry of food delivery applications has
economic implications. From the perspective of economic
benefits, online food delivery platforms generate numerous job
opportunities for people. For instance, according to the official
site of Eleme, Eleme covered over 2000 cities in China, with
more than 200 million users (Eleme official site, 2020). The
massive need for online delivery orders offered a considerable
amount of new job opportunities for young people, such as gig
economy workers (Sun, 2019). According to the newly
released Eleme Blue Knight Report 2020, nearly 300,000 jobs
for riders have been provided accumulatively for people from
poverty-stricken counties (Xiang, 2020). Likewise, in 2019, the
income of riders through Meituan Waimai reached 3.987
million, an increase of 23.3% over the data in 2018 (Shanghai
First Financial Data Technology Co., LTD, 2020). On February
25, 2020, the Ministry of Human Resources and Social
Security, State Administration of Market Supervision, and
National Bureau of Statistics together officially released 16
new career information, including "Online Delivery Service”.
The announcement means that delivery workers have been
officially recorded in the National Vocational Book (The
ministry of human resources and social security of the People’s
Republic of China, 2020).
While the emergence of the food delivery industry brings
convenience to the general public, it also brings economic
benefits and costs to society. On the one hand, from the
perspective of economics, since most delivery workers use
motorcycles to deliver the orders, the prevalence of food
delivery services brings many motorcyclists into society.
Therefore, the safety of road delivery is widely concerned and
discussed by the public. Previous studies have documented the
concerns of road safety for food delivery workers. For
example, Malkaa, Leibovitz-Zurb, and Naveh (2018) conduct a
study based on US cities’ food delivery services. The study
shows that a dual priority of road safety and customer service
leads to higher road accident rates than a single-priority one
that focuses only on road safety. Although their study only
focuses on the numbers of work-related accidents while our
study looks at the total number of road accidents in different
cities, the two studies’ general results are concurrent. Our study
concludes that the entry of food delivery services increases the
number of accidents on roads. Other studies, however, argue
for the opposite result. Horswill (2002) in his study concludes
that motorcyclists may practice dangerous behaviors such as
higher speed, shorter gap acceptance, overtaking, and a
worsened ability to detect hazardous situations. But compared
to car drivers, motorcyclists' risk of road accidents is lower, and
the overall connection of those behaviors with their accident
risks is surprisingly small. Scholars also brought forward
various reasons that accounted for the risks associated with
road accidents of delivery workers. In one study, Christie and
Ward (2019) argues that gig economy drivers experience
impairment caused by fatigue and pressure to violate speed
limits and to use their phones while driving or riding. To satisfy
customers’ needs, sometimes delivery workers would exceed
the speed limit to get the service done on time or complete
more orders. Also, using mobile phones frequently while
driving distracts delivery drivers’ driving performances,
leading to accidents (Horsman and Conniss, 2015; Silva et al.,
2012). In another study, Zha (2019) states three reasons for
delivery workers’ traffic violations, the first being they have a
weak sense of traffic safety, the lack of a regulation system for
delivery companies, and the insufficient level of promotion for
traffic safety education. Besides these soft factors mentioned
above, the motorcyclists’ helmets also played a part in the
factors that cause fatalities and severe injuries. Good quality
full-shell helmets with standard certification can save many
lives by reducing and preventing head injuries amongst
motorcyclists during road crash casualties. (Kulanthayan, See,
Kaviyarasu, and Nor Afiah, 2012; Chung, Song, and Yoon,
2013).
In our study, we investigate the economic benefits and costs
of online food delivery. Particularly, we evaluate the causal
effects of food delivery services on the number of car accidents
and the unemployment rate. We conduct the study by using the
data of the total number of car accidents and unemployment
rates from 18 cities in China, including existing tier 1, new tier
1, and popular cities in tier 2. We apply a Difference-in-
Difference methodology in identifying the causal effects.
Specifically, we use the staggered entry years of the two major
food delivery companies, Meituan and Eleme, into different
cities as the exogenous shocks to the supply of online food
delivery services. We test whether the number of car accidents
and the unemployment rates change after the positive shocks to
online food delivery services.
We begin by proposing a conceptual framework for
considering how the delivery industry's introduction may affect
car accident rates. We find that when Meituan or Eleme enters
a city, the number of car accidents increases by 611 per year
when we control city fixed effects. To further explore the
heterogeneity of such effects, we conduct a heterogeneity
analysis and find that the effects of online food delivery orders
on the number of car accidents are larger in regions with higher
income per capita. Such heterogeneity could be due to the fact
that cities with higher income are more likely to have more
numbers of delivery orders when online food delivery
platforms entered, thus resulting in more car accidents.
Therefore, a city like Shanghai with a higher income per capita
also has higher demand for food delivery services, and
therefore, when the food delivery platform entered, it will
cause more car accidents. In the report of Sina news in 2017,
Shanghai was the city with the most significant number of
delivery orders (Liberation Daily, 2019). We further find the
relationship between death counts caused by road accidents per
year and the entry of food delivery services by applying the
difference in difference model. For the entry of such services,
death counts have increased by 51.182 averagely per city per
year.
Multiple reasons could support our findings that the number
of car accidents increased after the food delivery industry. First
of all, the delivery workers themselves usually have a weak
sense of traffic safety. They violate traffic rules by speeding or
using mobile phones while riding. Secondly, the delivery
platforms lack regulation in their management. Most of them
promote a high association between the number of orders done
and the riders’ wages and inflict severe financial punishment
on riders for their overtime orders, indirectly causing traffic
rules violations among the riders. Thirdly, the government’s
insufficient promotion in traffic safety education for riders has
also accounted for the increased number of food delivery
accidents.
This study helps our society better understand that, while
food delivery brings convenience to people’s lives, it also has
generated economic costs. Barrios, Hochberg, and Yi (2019)
have done similar studies on ride-hailing services’ cost and
convenience. Compared with their study, which analyzes how
ride-hailing services affect the number of fatal car accidents in
the U.S., our study explores a new food-delivery platform
resulting from modern technology in China’s gig economy. We
also look at multiple indexes, including road accidents, death
counts, and unemployment rates, while their study focuses on a
single variable - the number of fatal accidents. To alleviate the
problem of the increased number of road accidents caused by
food delivery services, we propose the following suggestions to
policymakers: 1) The government should provide appropriate
support to reduce delivery workers’ life stress, restraining the
intention of their illegal behaviors on roads, such as speeding to
get more orders done. 2) Delivery service platforms should
improve their management mechanism, revising the current
rewards and punishment system, and undermining the
relationship between salary and number of orders done.
Therefore, the direct factor that prompts illegal public traffic
behavior may be severed. 3) The delivery platforms should
match reasonable delivery distance and time, reducing the
number of long-distance delivery and providing enough time
for delivery riders to proceed with each order. 4) The public
security department should publish and enforce a unified public
transport safety management policy for food delivery workers
and conduct regular training and education to improve their
cognitive awareness of public transport safety.
From the perspective of the economic benefits, we propose
the hypothesis that with the food delivery industry’s entry,
there will be a significant reduction in the unemployment rate.
This is because metropolises such as Shanghai have
approximately 63.5 million food delivery orders in 2018, which
requires a huge labor supply for food delivery riders (lindan,
2018). As a result, it generates more job opportunities for
unemployed people. Based on this hypothesis, we investigate
factors that affect the unemployment rate from previous
studies. Cao (2019) finds that opposed to traditional Western
economic theory, with the rapid growth in GDP, the
unemployment rate in China does not increase but decreases
because of the emergence of the gig economy and platforms
such as MeiTuan, Elema, and TaoBao. Another study on the
relationship between Internet popularization and urban
unemployment rate uses wage, GDP growth, and other
variables as controls to evaluate the unemployment rate (Wang,
2020). In addition, a study from Mizuno and Mizutani (2006)
finds that the higher the proportion of graduates in high-level
education, the lower the unemployment rate. Therefore, we
create a model using the unemployment rate as independent
variables, average wage, the number of students in high-level
education institutions, and GDP growth rate in each city as
controlled variables. However, we do not find any significant
association between the unemployment rate and our controlled
variables.
The paper proceeds as follows: Section 2 provides an
overview of food delivery services and outlines our conceptual
framework. Section 3 describes our data and sample. Section 4
presents our primary analyses and results. Section 5 explores
heterogeneous effects and conducts robustness checks. Section
6 presents an estimate of costs. Section 7 concludes the paper
and explains the limitation of our study.
II. AN OVERVIEW OF FOOD DELIVERY SERVICES
Packaging food is the earliest form of take-out, which is
generally understood as the food delivery service. However,
nowadays, with the rapid development of the Internet and
technology, traditional food delivery service has changed and
became much convenient: even with a finger on the phone, the
food riders will deliver a “feast” to the designated location.
Therefore, more and more people choose this way of enjoying
various cuisines without leaving home. In addition, with the
fast pace of young people’s lives today, cooking after a day of
exhaustion is a tiring and troublesome thing for them, and then
using a mobile phone to order becomes their best choice (Cao,
2019). Since the year of 2015, the food delivery platforms or
services began its savage growth period. The number of
platform users reached 450 million by the year 2019, and the
orders exceeded 30 million in a day during the peak period
(Big Data Digest, 2020).
The original and primitive form of food delivery was
takeout service, as people went to restaurants and brought food
by themselves. Then this service chain developed with the
emergence of phone orders, for which restaurants offer to
deliver food to customers instead of the other way around.
However, phone ordering issues soon appeared, such as
inefficiency, since it costs tremendous time to double confirm
orders over the phone, so the phone ordering was later replaced
by website ordering. Then, with the prevalence of mobile
phones and the increasing demand for food delivery services,
Meituan Waimai appeared in 2012 as the first mobile food
delivery application. Eleme followed a year later. According to
the report in the Sohu news, the users at the age of 20-25 make
up the largest portion of the customer at the rate of 30%,
followed by the 31-35, at a rate of 25% (Sixi, 2019).
The vital reason that an increased number of customers
choose food delivery services is the convenience they offer.
Especially, they offer the following advantages: 1)
Convenience. Food delivery services enable customers to
choose from a variety of restaurants, pay in their preferred
mode of payment, and real-time tracking of their orders. 2)
Speed. For most orders, food delivery services take around
only 30 minutes to execute the order. Real-time tracking, route
optimization, task automation, scheduling, and delivery
management modules enhance the delivery process. The food
delivery process is convenient for both clients and restaurant
owners. 3) Offers and promotions. To make their platform
more appealing to customers, food delivery applications
provide offers and promotions at times to catch the customers’
eyes. These promotions make food delivery services more cost-
efficient than the traditional mode of eating at restaurants.
Some platforms also use the cashback to instigate customers to
place more orders. The advantages above cause an increased
proportion of food delivery services’ revenue in the national
restaurant business’ revenue significantly from 2012 to 2019.
(He et al., 2020)
Due to the condition under COVID-19, many restaurants
have lost a significant number of customers. To minimize their
loss, many of them turned their service online. Followed by
restaurants, grocery stores also started delivering daily
supplies, increasing the demand for delivery workers. In
addition, with the promotion of non-contact delivery service,
delivery workers put the food and supplies in target areas to
avoid contact with customers; therefore, it guarantees the
service (“The development of the food delivery,” 2020). Under
such closely organized and supervised situations, the demand
for delivery service raised considerably.
III. SAMPLE AND DATA
Our study first collects data on the total number of road
accidents and the entry year of the two predominant food
delivery service platforms, Eleme and Meituan Waimai, in 18
cities. We find these data from the China Economic and Social
data Research platform, the database of CNKI, and the
National Bureau of Statistics. We also collect data for a
variety of control variables, including
1.GDP total,
2.average income,
 3.population, result in a higher probability of car accidents. Moreover, food
4.public transportation usage, delivery workers are always driving at high speed in order to
5.private vehicle ownership, send out the food within the time limit, thus, the high speed
6.population density, and fatigue after work resulting in accidents.
7.the total number of fatal accidents, To test hypothesis 1, we apply a staggered difference-in-
8.the total number of injured accidents. difference methodology in identifying the causal effects.
The majority of the data above is also collected through Particularly, a city became a treated unit after Meituan or
China Economic and Social data Research platform. For those Eleme started their business in that city. The baseline model
years, when data was not available on the platform above, we we use is as follows (controlling city fixed effects):
track the local governments’ annual statistic reports and
collect data from them.
We also collect data on the unemployment rate, including (1)
(1) GDP growth rate, (2) average wage, and (3) the number of
students enrolled in high-level educational institutions for each
city. For GDP growth rate and average wage, we collect these where is the number of car accidents in
data from China Economic and Social data Research platform. city i of year t. equals to one.
Furthermore, we find these data on the China Economic equals one if year t is after the entry year of Meituan or Eleme
Information Network for the number of students in high-level in city i. are the matrix of control variables. is the
educational institutions.
city fixed effects Control variables include income measures
Our data covers 18 cities in China. Of the 18 samples
of financial income per person. Car ownership measures the
selected, 3 of them are developed cities, 9 of them are “new
number of private vehicles owned by people. Population
tier 1” cities according to CBN · Research on new First-tier
density measures population per square mile. Public
Cities, and the remaining are popular tier 2 cities that serve as
Transportation Usage measures the number of people who use
critical economic centers in their relative provinces. For each
public transportation each year. The number of car accidents
city, we cover their data in thirteen years, ensuring that at least
contains both fatal and non-fatal accidents.
data of five years before and five years after the entry of food
Our baseline OLS results are reported Table 2. From Table
delivery services are collected.
2, we find that since the food delivery enters the specific city,
This Figure1 measures data of 19 cities from 2007 to 2019.
the number of car accidents will increase at the number of
Income measures the financial income per person. Car
610.605.
ownership measures the number of private vehicles that are
This Figure2 represents the relationship between car
owned by people. Population density measures the population
accidents and the entry of the food delivery service. The
per square mile. Public Transportation Usage measures the
dependent variable is the number of car accidents that
number of people who use public transportation each year.
occurred in year of city . Control variables in all regressions
The number of car accidents contains both fatal and non-fatal
include the GDP, population, income per capita, number of
accidents. Standard errors are clustered at city and year level,
private car ownership, population density, and public
reported in the parentheses. ∗∗∗, ∗∗, and ∗ represent
transportation usage. standard errors are clustered at city and
statistical significance at 1%, 5%, and 10% levels,
year level, reported in the parentheses. ∗∗∗, ∗∗, and ∗
respectively.
represent statistical significance at 1%, 5%, and 10% levels,
respectively.

Figure 1. Summary Statistics

IV. USING THE TEMPLATE

A. The Effects of Food Delivery Services on the Number of
Car Accidents
1) Hypothesis 1: The Entry of Food Delivery Services
Increased the Number of Car Accidents
The food delivery service's entry will bring more traffic
because more food delivery workers will appear on the road,
riding their electric power cars. More cars on the road will
 This Figure3 represents the relationship between the
number of deaths and the entry of the food delivery service.
The dependent variable is the number of deaths in car
accidents that occurred in the year of the city . Control
variables in all regressions include the GDP, population,
income per capita, population density, car ownership, and the
use of public transportation. Standard errors are clustered at
city and year level and reported in the parentheses. ∗∗∗, ∗∗,
and ∗ represent statistical significance at the 1%, 5%, and
10% levels, respectively.

Figure 2. The effect of the food delivery service entry on car accident

2) Hypothesis 2: The Entry of Food Delivery Services

Increases the Number of Death in car accidents.

Since hypothesis 1 suggested that the entry of food

delivery service will increase the number of car accidents. To
be more specific, the more car accidents will lead to a larger
number of deaths.
To test hypothesis 2, we apply a staggered difference-in-
difference methodology in identifying the causal effects.
Particularly, a city became a treated unit after Meituan or Figure 3. The Effects of Online Food Delivery Entry on The Number Of
Eleme started their business in that city. The baseline model Deaths In Car Accidents (controlling city fixed effect)
we use is as follows (controlling city fixed effects):
B. The Effects of Food Delivery Services on Unemployment
Rate
(2)
1) Hypothesis 2: The Entry of Food Delivery Services
Increased the Number of Car Accidents
where is the number of car accidents in city i We also conduct a diff-in-diff regression analysis on the
effects of the entry of food delivery service on unemployment.
of year t. equals to one. equals one if year t is
We do not observe a statistically significant effect after
after the entry year of Meituan or Eleme in city i. are the controlling city fixed effects and clustering standard errors at
matrix of control variables. is the city fixed effects. the city and year level. We cannot conclude that there is no
Control variables include population, car ownership, which effect because our study's sample size is not very large, and
measures the number of private cars owned by people, GDP, the insignificance could be due to low statistical power.
income, population density, and public transportation usage,
which measures the number of times the public transportation
used by citizens every year.
 This Figure5 illustrates the percentage change in the
number of car accidents using a difference-in-difference
(3) regression. The dependent variable is the logarithm of the
number of car accidents plus one. Standard errors are clustered
at city and year level, reported in the parentheses. ∗∗∗, ∗∗,
where is the unemployment rate in and ∗ represent statistical significance at 1%, 5%, and 10%
city i of year t. equals to one. levels, respectively.
equals one if year t is after the entry year of Meituan or Eleme
in city i. are the matrix of control variables. is the
city's fixed effects. Control variables include population, GDP,
income per capita, population density, GDP growth rate,
salary, the number of undergraduates.
This Figure4 represents the relationship between the
unemployment rate and the entry of the food delivery service.
The dependent variable is the unemployment rate in the year
of city . Control variables in all regressions include the GDP,
population, income per capita, population density, GDP
growth rate, salary, and the number of undergraduates.
standard errors are clustered at city and year level, reported in
the parentheses. ∗∗∗, ∗∗, and ∗ represent statistical
significance at 1%, 5%, and 10% levels, respectively.

Figure 5. The Effects of Online Food Delivery Services on the Percentage

Change in the Number of Car Accidents

We conduct the heterogeneous analysis in table 6. Our

group targets the variable of income. We find that income has
a direct correlation with the car accident. The number of car
accidents are varied from differences in personal income.
This Figure6 represents a triple difference regression,
where the interaction term includes treatment * post * income,
where income is the average disposable income in city of year
. Standard errors, adjusted for clustering at the city and year
level, are reported in parentheses. ∗∗∗, ∗∗, and ∗ represent
statistical significance at 1%, 5%, and 10% levels,
respectively.
Figure 4. he Effects of Online Food Delivery Entry on the Unemployment
Rates (Controlling Fixed Effects)

V. ROBUSTNESS CHECK AND HETEROGENEOUS EFFECTS

For the robustness check, we want to determine the
percentage in the rate of change brought by independent
variables to car accidents. Therefore, we use the log (1 +
accident) as the dependent variables and get the percentage of
change is 19.7%.

Figure 6. Heterogeneous effect analysis
(4)
where is the number of car accidents in
city i of year t. equals to one.
equals one if year t is after the entry year of Meituan or Eleme
in city i. are the matrix of control variables. is the
city's fixed effects. The is the income data in city
i of year t.
VI. COST ESTIMATION OF CAR ACCIDENTS
Until this point, our study has documented the effects of
the total number of accidents since the entry of food delivery
services. Such an increased number of accidents also results in
societal and economic costs. Attempting to quantify the
economic cost of the increase in the number of accidents due
to the emerging online food delivery services, we collect data
on the average cost of car accidents in China. We find data on
the total number of accidents and total cost of accidents in the
year 2017 from the National Bureau of Statistics, under the
assumption that the average cost of car accidents due to online
delivery is the same as the average cost of all car accidents in
China. In 2017, there were 203,049 accidents in total in China,
and the direct property damage was 1,213.113 million CNY,
which means that car accidents have an average cost of
5,974.484 CNY (National Bureau of Statistics, 2018). Since
our model documents an increase of 611 accidents per city per
year after the entry of the food delivery services, an
approximately substantial increase of cost of 3.65 million
CNY per city each year was expected, equivalent to
531,651.44 USD. Such number are the estimated economic
costs of the entry of online food delivery services.
VII. CONCLUSION
In this paper, we provide evidence consistent with the
online food delivery industry, imposing an increase in the
number of road accidents in the cities it serves. Although we
do not find a clear association between the entry of food
delivery platforms and the unemployment rate, we cannot
deny the null argument that their emergence decreases the
unemployment rate. By applying the difference in difference
method, we document a roughly 619 increase per city per year
in the number of road accidents. By using the total number of
road accidents as a function of a regression model with the
number of accidents as dependent variable and other data we
collect, like population, GDP, as independent variable, we
develop a conceptual framework for analyzing how the
introduction of the online food delivery system may affect the
number of road accidents. While our documented effects alone
are unlikely to fully explain the reversal of the accident trend
and the decrease in unemployment rates in recent years, they
are worthy of being further explored and discussed. Moreover,
while the impact of increased accidents associated with the
online delivery industry is significant, it also brings many
benefits. These platforms bring significant convenience to
people’s lives, such as improved mobility and customers’
choices, boosted online visibility, and more customers for
restaurant owners, resulting in consumers’ and owners’
surplus.
Finally, given the relatively short period in which the
online food delivery industry has existed, our results are
inevitably short-term. The long-term consequences of this
young industry may differ, as individuals may change
behavior as time passes. For instance, public education on
road safety may be promoted to more delivery workers, and
platforms may generate stricter and more organized
regulations. Additionally, since our research sample size is
relatively small, we cannot cover all cities that employ online
food delivery services, which is also a factor that might affect
our results. Nevertheless, the society could benefit from our
research for future policy guidance considering the short-term
effects of the food delivery industry documented here, and
future research in examining long-term cost and benefits of
online food delivery services.
ACKNOWLEDGMENT
Thanks to Mr. Christopher Kersey for teaching us patiently
in AP Economics, Dr. Brian Kaschak for teaching us AP world
history, which inspired us to conduct scientific research in the
field of economic modeling; thanks to Mr. James Doherty for
teaching us Calculus and other related math courses that
provided us with the required knowledge to create our models
and function to represent our experiment. Special thanks to
Professor Michael Dong for being our instructor during the
process of this research.
This research paper is a collective effort of Xiyue Tan,
Kaiqi Shen, and Runyu Liu. Xiyue Tan and Runyu Liu collect
data, research for similar studies, organize literature reviews,
write and revise the majority of the paper. Kaiqi Shen collects
data, creates and runs our models, and contributes significantly
to the writing and revising of the empirical analysis and
robustness check section of the paper.
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