The collaborative economy (or “platform economy”), encompassing work-on-demand via apps like Uber and crowdwork like Amazon Mechanical Turk, has grown exponentially in recent years, thanks to the development of high-speed networks, the exploitation of big data and the availability of mobile devices, which have cut down transaction costs and allow for real-time effective matching of supply and demand. While creating many new opportunities for digital and physical services, which have, thanks to lower costs as compared to established operators, rather expanded the market for services instead of crowding out the incumbents, this new digitally based economy has also raised questions on the situation of workers. As this literature review shows, their legal status (either as employees or self-employed) is often unclear, and negative effects on the labour market can be witnessed (such as missing social protection, low remuneration of work, questionable work-life balance and more). Many of these effects are due to the functioning of the digital economy, which relies on micro-tasks, trust-inducing mechanisms as ratings and - at times opaque - algorithms. The literature review also presents policy solutions as discussed in recent literature.