Uber Tipping Trends

What is the consequence of tipping on the take-home pay of Uber drivers? Economic theory offers a clear answer. Tipping has no impact on take home pay. The source of Uber driver-hours is very elastic. Drivers can quickly work more hours when the payment per ride increases and since every individual with a decent car is a possible Uber driver additionally, it is easy for the number of drivers to expand if payments increase. As a good approximation, we can think of this supply of driver-hours as being perfectly elastic in a predetermined market wage. This means is that take home pay needs to remain steady even when leaning increases.

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