Simulating Minimum Pay Floors for Platform Workers in India: A Welfare and Income Volatility Analysis

The rapid expansion of platform-based gig work in India has revived policy debates around minimum pay guarantees, yet most existing studies rely on descriptive assessments or normative arguments. This paper departs from that approach by constructing a simulation-based economic model to analyze the effects of minimum pay floors on worker welfare and income volatility in India’s gig economy. Using a microeconomic framework, the study models gig workers as income-maximizing agents operating under demand uncertainty and platform-controlled pricing. Worker income is expressed as a function of task frequency, per-task remuneration, and fixed and variable costs, while income instability is captured through probabilistic variance measures. Counterfactual simulations are conducted under alternative minimum pay floor scenarios to compare expected income levels, income volatility, and welfare outcomes against a baseline unregulated platform setting. The results indicate that minimum pay floors can significantly reduce income volatility and improve expected worker welfare even when average earnings increase only modestly. However, the simulations also reveal a redistribution of surplus away from platforms, highlighting the monopsonistic characteristics of digital labor markets. The analysis demonstrates that the primary economic benefit of pay guarantees lies not merely in higher mean incomes but in risk reduction and income stabilization, which are critical in the absence of social security. By focusing on simulated outcomes rather than existing wage regulations, this study provides an original analytical contribution to the gig economy literature and offers a quantitative basis for policy discussions on platform labor regulation in India.