Landing the First Job: The Value of Intermediaries in Online Hiring
63 Pages Posted: 10 Jun 2011 Last revised: 26 Nov 2014
Date Written: October 3, 2014
Abstract
Online markets for remote labor services allow workers and firms to contract with each other directly. Despite this, intermediaries -- called outsourcing agencies -- have emerged in these markets. This paper 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.
Keywords: Labor market intermediation, offshoring, incomplete information
JEL Classification: F16, J30, D02, O30
Suggested Citation: Suggested Citation
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