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Paying Gig Workers

Author

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  • Butschek, Sebastian
  • Kampkötter, Patrick
  • Sliwka, Dirk

Abstract

We study the compensation of gig workers in a natural field experiment. To derive testable predictions, this paper presents a formal model capturing a central feature of online freelance work: gig work- ers' ability to choose both how much to work and how big an e¤ort to make. We analyse the set-up in a principal-agent model, showing that the optimal contract includes a sales-based commission and uses a gig-based piece rate to insure a risk-averse agent. This piece rate is in- creasing in her risk aversion, intrinsic motivation and ability. We then predict the e¤ects of introducing a gig piece rate while reducing the commission rate. The effects on the agents' choices of quantity and quality are heterogeneous in their risk aversion, intrinsic motivation and ability.

Suggested Citation

  • Butschek, Sebastian & Kampkötter, Patrick & Sliwka, Dirk, 2017. "Paying Gig Workers," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168149, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168149
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    References listed on IDEAS

    as
    1. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    2. Wendelin Schnedler, 2008. "When Is It Foolish to Reward for A While Benefiting from B?," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 595-619, October.
    3. Wolfstetter,Elmar, 2000. "Topics in Microeconomics," Cambridge Books, Cambridge University Press, number 9780521645348, November.
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    More about this item

    Keywords

    Incentives; Risk Aversion; Intrinsic Motivation; Sales Compensation; Multitasking; Field Experiment;
    All these keywords.

    JEL classification:

    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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