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Does Information Help or Hinder Job Applicants from Less Developed Countries in Online Markets?

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  • Ajay K. Agrawal
  • Nicola Lacetera
  • Elizabeth Lyons

Abstract

Online markets reduce certain transaction costs related to global outsourcing. We focus on the role of verified work experience information in affecting online hiring decisions. Prior research shows that additional information about job applicants may disproportionately help or hinder disadvantaged populations. Using data from a major online contract labor platform, we find that contractors from less developed countries (LDCs) are disadvantaged relative to those from developed countries (DCs) in terms of their likelihood of being hired. However, we also find that although verified experience information increases the likelihood of being hired for all applicants, this effect is disproportionately large for LDC contractors. The LDC experience premium applies to other outcomes as well (wage bids, obtaining an interview, being shortlisted). Moreover, it is stronger for experienced employers, suggesting that learning is required to interpret this information. Finally, other platform tools (e.g., monitoring) partially substitute for the LDC experience premium; this provides additional support for the interpretation that the effect is due to information about experience rather than skills acquired from experience. We discuss implications for the geography of production and public policy.

Suggested Citation

  • Ajay K. Agrawal & Nicola Lacetera & Elizabeth Lyons, 2013. "Does Information Help or Hinder Job Applicants from Less Developed Countries in Online Markets?," NBER Working Papers 18720, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18720
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    Cited by:

    1. John J. Horton & Richard J. Zeckhauser, 2016. "The Causes of Peer Effects in Production: Evidence from a Series of Field Experiments," NBER Working Papers 22386, National Bureau of Economic Research, Inc.
    2. repec:cep:stieop:56 is not listed on IDEAS
    3. Tjaden, Jasper Dag & Schwemmer, Carsten & Khadjavi, Menusch, 2018. "Ride with Me - Ethnic Discrimination, Social Markets and the Sharing Economy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 34(4), pages 418-432.
    4. Vera Brenčič, 2016. "The impact of Craigslist’s entry on competing employment websites," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-15, December.
    5. Alan Benson & Aaron Sojourner & Akhmed Umyarov, 2020. "Can Reputation Discipline the Gig Economy? Experimental Evidence from an Online Labor Market," Management Science, INFORMS, vol. 66(5), pages 1802-1825, May.
    6. Martin Abel & Rulof Burger & Patrizio Piraino, 2017. "The value of reference letters," Working Papers 06/2017, Stellenbosch University, Department of Economics.
    7. John Horton & William R. Kerr & Christopher Stanton, 2017. "Digital Labor Markets and Global Talent Flows," NBER Chapters, in: High-Skilled Migration to the United States and Its Economic Consequences, pages 71-108, National Bureau of Economic Research, Inc.
    8. Matthew Groh & David McKenzie & Nour Shammout & Tara Vishwanath, 2015. "Testing the importance of search frictions and matching through a randomized experiment in Jordan," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-20, December.
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    10. Marios Kokkodis, 2021. "Dynamic, Multidimensional, and Skillset-Specific Reputation Systems for Online Work," Information Systems Research, INFORMS, vol. 32(3), pages 688-712, September.
    11. Cristiano Codagnone & Fabienne Abadie & Federico Biagi, 2016. "The Future of Work in the ‘Sharing Economy’. Market Efficiency and Equitable Opportunities or Unfair Precarisation?," JRC Research Reports JRC101280, Joint Research Centre.
    12. Martin Lukac & André Grow, 2021. "Reputation systems and recruitment in online labor markets: insights from an agent-based model," Journal of Computational Social Science, Springer, vol. 4(1), pages 207-229, May.
    13. Marios Kokkodis, 2023. "Adjusting Skillset Cohesion in Online Labor Markets: Reputation Gains and Opportunity Losses," Information Systems Research, INFORMS, vol. 34(3), pages 1245-1258, September.
    14. Tjaden, Jasper Dag & Schwemmer, Carsten & Khadjavi, Menusch, 2017. "Ride with me: Ethnic discrimination in social markets," Kiel Working Papers 2087, Kiel Institute for the World Economy (IfW Kiel).
    15. Moshe A. Barach & Joseph M. Golden & John J. Horton, 2019. "Steering in Online Markets: The Role of Platform Incentives and Credibility," NBER Working Papers 25917, National Bureau of Economic Research, Inc.
    16. Ajay Agrawal & John Horton & Nicola Lacetera & Elizabeth Lyons, 2015. "Digitization and the Contract Labor Market: A Research Agenda," NBER Chapters, in: Economic Analysis of the Digital Economy, pages 219-250, National Bureau of Economic Research, Inc.
    17. Mark Graham & Isis Hjorth & Vili Lehdonvirta, 2017. "Digital labour and development: impacts of global digital labour platforms and the gig economy on worker livelihoods," Transfer: European Review of Labour and Research, , vol. 23(2), pages 135-162, May.
    18. Yili Hong & Chong (Alex) Wang & Paul A. Pavlou, 2016. "Comparing Open and Sealed Bid Auctions: Evidence from Online Labor Markets," Information Systems Research, INFORMS, vol. 27(1), pages 49-69, March.
    19. Lehdonvirta, Vili & Kässi, Otto & Hjorth, Isis & Barnard, Helena & Graham, Mark, 2018. "The Global Platform Economy: A New Offshoring Institution Enabling Emerging-Economy Microproviders," SocArXiv jt4z7, Center for Open Science.
    20. Lukac, Martin & Grow, André, 2020. "Reputation systems and recruitment in online labor markets: insights from an agent-based model," LSE Research Online Documents on Economics 114454, London School of Economics and Political Science, LSE Library.
    21. Guo Xu, 2015. "How Does Collective Reputation Affect Hiring? Selection and Sorting in an Online Labour Market," STICERD - Economic Organisation and Public Policy Discussion Papers Series 056, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    22. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.
    23. Estrella Gomez-Herrera & Bertin Martens & Frank Muller-Langer, 2017. "Trade, competition and welfare in global online labour markets: A "gig economy" case study," JRC Working Papers on Digital Economy 2017-05, Joint Research Centre.
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    More about this item

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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