Search, Screening, and Information Provision: Personnel Decisions in an Online Labor Market

Abstract

Marketplaces such as online labor markets are often in a position to provide agents with public certified information to facilitate trade. I examine how employers on oDesk.com, the world's largest online marketplace, use public information in hiring. By experimentally varying employers' access to applicants' past wage rates, I demonstrate that market provided cheap-to-observe signals of quality are used by employers as substitutes for costly search and screening. I show that when employers are searching for someone low skilled then the provision of coarse information from the market is sufficient and employers will not pay a cost to acquire more information. When employers are looking for someone high skilled they will pay fixed screening costs to acquire information beyond what is provided by the platform. If the coarse information is not provided by the marketplace, then even employers looking for unskilled labor will pay to acquire more information. This leads to more matches and hiring quality workers at a lower price. However, the cost savings from identifying and hiring these low cost, but high quality workers does not outweigh the upfront cost of information acquisition.

Skill networks and measures of complex human capital

“…Online freelance labor has been a growing part of the economy fueled by a combination of better technology and evolving attitudes toward career change, and that growth is expected to continue ( 22 ). As a result, UpWork and associated markets (e.g., Elance and ODesk) have been the subject of much recent study ( 23 – 27 ).…”

“…We use this full population to construct our skill networks, because all of the workers are visible to employers and thus, part of the labor market; 18,283 workers have a wage history on the site. A worker’s average hourly wage is calculated from her wage history, which both is publicly visible and cannot be altered ( 26 ). While both hourly and flat rate jobs are listed, we only consider hourly jobs in calculating the wage rate, because we do not observe the hours worked on fixed price jobs.…”

“…These denote different subpools of labor, which are likely identifiable to employers observing the labor market. Employers use this kind of “low-bandwidth” information as a substitute for more costly search mechanisms ( 26 ). In the case of UpWork, there is substantial overlap between the endogenous categories derived from the network and their exogenously generated job categories.…”

Gerenciamento e disciplina algorítmica: uma análise focalizada em plataformas de emprego de elevada qualificação

“…Outro aspecto crítico para uma boa governança das plataformas digitais de trabalho de maior qualificação refere-se à facilitação de mecanismos de matchmaking (correspondência) entre oferta e demanda de trabalho, com impactos diretos na redução de Custos de Transação. Neste sentido, um problema importante que os mercados de trabalho mais fragmentados enfrentam é identificar trabalhadores de alta qualidade e, portanto, encontrar as correspondências certas para os cargos (Barach, 2015). Basicamente, as plataformas freelances fornecem serviços de correspondência que permitem reduzir os custos de pesquisa e transação para freelancers e clientes, usando tecnologia de assistência em graus variados.…”