Strategic Responses to Technological Change: Evidence from Online Labor Markets

In this project, we examine how freelancers changed their behavior on an online work platform following the launch of ChatGPT in November 2022. We first document that, post-ChatGPT, freelancers bid on fewer jobs and reposition themselves by differentiating their distribution of bids relative to their prior behavior. We disentangle heterogeneity in repositioning across work domains by exploring how exposure to changes in supply or demand underlie repositioning. Decreases in the demand for labor post-ChatGPT lead workers to reposition themselves by withdrawing from the focal market/exiting the platform and changing their horizontal positioning (i.e., work domain), while increases in the supply of labor post-ChatGPT are less likely to lead to changes in volume of activity or horizontal positioning but more likely to result decrease the proportion of bids to high-value jobs, perhaps in response to increased competition. We further show that repositioning is less likely when adjustment costs are higher due to greater skill. Our research contributes to our understanding of how and why workers respond to technological change.