Participation and Losses in Multi-Level Marketing: Evidence from an FTC Settlement

Claes Bäckman and Tobin Hanspal ()
Additional contact information
Tobin Hanspal: Research Center SAFE, Goethe University, Frankfurt, Germany, https://sites.google.com/site/tobinhanspal/

No 2018:13, Working Papers from Lund University, Department of Economics

Abstract: More than 20 million Americans are affiliated with Multi-Level Marketing firms (MLMs), but there is little empirical evidence on who participates in this controversial part of today's labor market. We link data on 350,000 individuals cited in an FTC settlement with one of the largest MLMs to detailed county-level information. We find that participation is greater in areas with higher median income and where women are absent from the labor market, suggesting value in flexible work. However, losses are correlated with higher inequality and lower social capital, suggesting that the pitfalls accrue to vulnerable groups.

Keywords: Multi-level marketing; Alternative work; Consumer financial protection (search for similar items in EconPapers)
JEL-codes: J21 J22 L26 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-05-30, Revised 2019-08-22
New Economics Papers: this item is included in nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Participation and losses in multi-level marketing: Evidence from an FTC settlement (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2018_013

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