"Does Information from Online Markets for Contract Labor Help or Hinder Applicants from Less Developed Countries?" with Nicola Lacetera, University of Toronto. Tuesday, October 23, 3:40 PM, 368A Heady Hall.

Nicola Lacetera is an Assistant Professor of Management at the University of Toronto, and a Faculty Research Fellow at the National Bureau of Economic Research. He joined the faculty of the university of Toronto in 2010 after having served four years as Assistant Professor of Economics at Case Western Reserve University, and having earned his Ph.D. from the Sloan School of the Massachusetts Institute of Technology in 2006. He is an applied economist with interests in the functioning of markets and organizations. His research concerns how different motivations and institutional arrangements affect the production and commercialization of knowledge in universities; how incentives and worker selection affect innovation and the functioning of online labor markets; the determinants of value and quality in the automobile sector; and how non-profit organizations motivate individuals to provide socially relevant goods. He relies on observational and experimental data, as well as theoretical models.

Abstract: Transactions in online contract labor markets have increased exponentially over the past years. A key feature and objective of these platforms is to globalize previously local labor markets, and in particular to grant access to contractors from less developed countries (LDCs). Analyzing transactions on the large online platform for contract labor, oDesk, we find however, that contractors from LDCs, even after controlling for a wealth of observable characteristics, are at a significant disadvantage in terms of employment opportunities. We do find, however, that a second key feature of online platform, standardized and verifiable information, and, in particular, prior experience on the platform, disproportionately benefits LDC applicants in their ability to be hired for a project, and in their posted wages. This result is stronger for 1) experienced employers, who have learned to interpret this information; 2) fixed-price contracts, which do not offer low-cost monitoring like hourly contracts; and 3) jobs that are more difficult to evaluate in a standardized way (e.g., writing and administration vs. software development). We discuss the implications of these findings for companies and workers, the role of online platforms, and whether this technology will further increase wage and opportunity inequality or instead accelerate convergence.