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Missing trade in tasks: employer outsourcing in the gig economy

Author

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  • Stanton, Christopher
  • Thomas, Catherine
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.

Suggested Citation

  • Stanton, Christopher & Thomas, Catherine, 2019. "Missing trade in tasks: employer outsourcing in the gig economy," LSE Research Online Documents on Economics 102624, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:102624
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    Cited by:

    1. Sebastian Butschek & Roberto González Amor & Patrick Kampkötter & Dirk Sliwka, 2019. "Paying Gig Workers - Evidence from a Field Experiment," CESifo Working Paper Series 7983, CESifo.
    2. Paul Oyer, 2020. "The gig economy," IZA World of Labor, Institute of Labor Economics (IZA), pages 471-471, January.
    3. Butschek, Sebastian & González Amor, Roberto & Kampkötter, Patrick & Sliwka, Dirk, 2022. "Motivating gig workers – evidence from a field experiment," Labour Economics, Elsevier, vol. 75(C).
    4. Chiara Belletti & Daniel Erdsiek & Ulrich Laitenberger & Paola Tubaro, 2021. "Crowdworking in France and Germany," Working Papers hal-03468022, HAL.
    5. Thomas, Catherine & Chen, Zhuoqiong (Charlie) & Stanton, Christopher T., 2020. "Information Spillovers in Experience Goods Competition," CEPR Discussion Papers 15255, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    gig economy; outsourcing; hiring;
    All these keywords.

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General

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