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Unemployment and online labor

Kathrin Borchert, Matthias Hirth, Michael E. Kummer, Ulrich Laitenberger, Olga Slivko and Steffen Viete ()

No 18-023, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Online labor markets experienced a rapid growth in recent years. They allow for long-distance transactions and offer workers access to a potentially 'global' pool of labor demand. As such, they bear the potential to act as a substitute for shrinking local income opportunities. Using detailed U.S. data from a large online labor platform for microtasks, we study how local unemployment affects participation and work intensity online. We find that, at the extensive margin, an increase in commuting zone level unemployment is associated with more individuals joining the platform and becoming active in fulfilling tasks. At the intensive margin, our results show that with higher unemployment rates, online labor supply becomes more elastic. These results are driven by a decrease of the reservation wage during standard working hours. Finally, the effects are transient and do not translate to a permanent increase in platform participation by incumbent users. Our findings highlight that many workers consider online labor markets as a substitute to offline work for generating income, especially in periods of low local labor demand. However, the evidence also suggests that, despite their potential to attract workers, online markets for microtasks are currently not viable as a long run alternative for most workers.

Keywords: Unemployment; Crowdworking; Online platform (search for similar items in EconPapers)
JEL-codes: D29 D80 H41 J60 L17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-pay
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

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