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Landing the First Job: The Value of Intermediaries in Online Hiring

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  • Christopher T. Stanton
  • Catherine Thomas

Abstract

Online markets for remote labour services allow workers and firms to contract with each other directly. Despite this, intermediaries—called outsourcing agencies—have emerged in these markets. This article shows that agencies signal to employers that inexperienced workers are high quality. Workers affiliated with an agency have substantially higher job-finding probabilities and wages at the beginning of their careers compared to similar workers without an agency affiliation. This advantage declines after high-quality non-affiliated workers receive good public feedback scores. The results indicate that intermediaries have arisen endogenously to permit a more efficient allocation of workers to jobs.

Suggested Citation

  • Christopher T. Stanton & Catherine Thomas, 2016. "Landing the First Job: The Value of Intermediaries in Online Hiring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 810-854.
    • Handle: RePEc:oup:restud:v:83:y:2016:i:2:p:810-854.
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    File URL: http://hdl.handle.net/10.1093/restud/rdv042
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    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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