Missing trade in tasks: employer outsourcing in the gig economy

Christopher Stanton and Catherine Thomas

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Only a small share of employers in high-wage locations procure services from abroad. We document heterogeneous employer adoption of an online labor market that facilitates trade in tasks with global workers. Job vacancies posted by experienced employers who have adopted the market are twice as likely to be filled, and this difference is unrelated to the set of available job applicants or their wages. Instead, hiring demand from experienced employers shifts outward for two reasons that we identify using exogenous variation in workers' wage bids. First, their value for hiring in the market increases - |a form of learning-by-doing. Second, experienced employers omit the low-value employers who leave the market. Employers appear to learn their value for online hiring only by trying it out, and new employers' adoption decisions are relatively insensitive to wage rates. Larger _firms have lower estimated values for the market. The results suggest that employers' willingness to fragment and outsource production at the task level, rather than the quality of the available online workforce, limits the growth of the gig economy.

Keywords: gig economy; outsourcing; hiring (search for similar items in EconPapers)
JEL-codes: J00 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2019-03-19
References: Add references at CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Missing trade in tasks: employer outsourcing in the gig economy (2019)
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