Working Paper: NBER ID: w19525
Authors: Ajay Agrawal; John Horton; Nicola Lacetera; Elizabeth Lyons
Abstract: Online contract labor globalizes traditionally local labor markets, with platforms that enable employers, most of whom are in high-income countries, to more easily outsource tasks to contractors, primarily located in low-income countries. This market is growing rapidly; we provide descriptive statistics from one of the leading platforms where the number of hours worked increased 55% from 2011 to 2012, with the 2012 total wage bill just over $360 million. We outline three lines of inquiry in this market setting that are central to the broader digitization research agenda: 1) How will the digitization of this market influence the distribution of economic activity (geographic distribution of work, income distribution, distribution of work across firm boundaries)?; 2) What is the magnitude and nature of information frictions in these digital market settings as reflected by user responses to market design features (allocation of visibility, investments in human capital acquisition, machine-aided recommendations)?; 3) How will the digitization of this market affect social welfare (increased efficiency in matching, production?)? We draw upon economic theory as well as evidence from empirical research on online contract labor markets and other related settings to motivate and contextualize this research agenda.
Keywords: Contract Labor; Digitization; Labor Markets; Economic Activity; Welfare
JEL Codes: J24; J61; O15; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Digitization (L86) | Social welfare (I38) |
| Digitization of the contract labor market (J41) | Shift work towards lower-income countries (F66) |
| Information frictions (D89) | Employment outcomes (J68) |
| Small informational changes (D89) | Income distribution among contractors (D39) |
| Digitization of the contract labor market (J41) | Distribution of economic activity (R12) |