Sharing economy has developed rapidly in recent years, but little is known regarding its real effects. This paper examines how a pioneer of sharing economy—Airbnb—affects local economy. Using venture capital infusions as plausibly exogenous shocks to Airbnb’s expansion into a new county, we find that Airbnb expansion leads to poorer hotel performance in the local county. Meanwhile, Airbnb expansion appears to reduce unemployment rate and increase household income. Further analysis suggests that increased employment is concentrated in industries that are complementary to Airbnb’s business and in employee groups with lower education levels. Our study sheds new light on the real effects of the sharing economy and provides important policy implications for policymakers.