Effects of IT-enabled Monitoring Systems in Online Labor Markets

This paper investigates how IT-enabled monitoring systems mitigate moral hazard in an online labor market and their effect on market competition. We exploit a quasi-experiment at Freelancer when it introduced enhanced offline tracking features in 2015. Using a large dataset including 17,827 fixed-price projects and 8,563 hourly projects, we use a difference-in-differences (DID) approach to identify the treatment effect of the implementation of IT-enabled monitoring systems on employer contractor choice, employer surplus and market competition. We found that the IT-enabled monitoring system lowers the employers’ preference for high-reputable bidders, and thus reduces the reputation premiums. Meanwhile, comparing the trend of fixed-price projects, the implementation of the monitoring systems increased the number of bids by 17.4% and increased employer surplus in hourly projects by 21.5%. Our result suggests that IT-enabled monitoring systems have a significant effect on alleviating moral hazards, reducing agency costs, and facilitating market competition

Moral Hazards and Effects of IT-enabled Monitoring Systems in Online Labor Markets

This paper investigates how IT-enabled monitoring systems mitigate moral hazard in an online labor market and their effect on market competition. We exploit a quasi-experiment at Freelancer when it introduced an IT-enabled monitoring system in 2015. We use a difference-in-differences (DID) approach to identify the treatment effect of the monitoring system on employer contractor choice, market competition, and employer surplus. We found that the IT-enabled monitoring system lowers the employers’ willingness to pay the reputation premiums. Meanwhile, comparing the trend of the control group, the IT-enabled monitoring system raised the employer surplus in hourly projects and increased the number of bids. Our result suggests that IT-enabled monitoring systems have a significant effect on alleviating moral hazards, reducing agency costs, and facilitating market competition

What's Behind the Increase in Inequality?

The focus of this paper is the increase in earnings inequality over the last 30-plus years. Economists have well-developed theories that explain differences in wage levels among different categories of workers. Differences in educational attainment and skills are a major source of these differences; large organizations typically employ workers with a wide range of skills and responsibilities and pay them accordingly. As a result, the level of wage inequality within organizations is quite large. This paper does not challenge these results. It argues, however, that these theories are not adequate to explain a relatively recent phenomenon: the increase in recent decades in wage inequality among workers with similar levels of education and similar demographic characteristics who are employed in similar occupations but in different firms or establishments. These differences in wages are how most people experience inequality. Yet much of the analysis by economists has focused on developments that have enabled leading firms in the U.S. to increase their ability to extract monopoly rents.This paper reviews a wide-ranging literature that examines the increased ability of leading firms to extract monopoly rents. It also reviews the more recent and still thin literature on the increase in inequality among workers with similar characteristics but different employers. The contribution of this paper is the identification of a mechanism that reconciles these two strains of economic research and explains how the increase in rent extraction is linked to the increasingly unequal pay of U.S. workers with similar characteristics. I draw on joint work with Rosemary Batt (2014) to identify new opportunities for rent seeking behavior, and on joint work with Annette Bernhardt, Rosemary Batt and Susan Houseman (2016, 2017) on domestic outsourcing, inter-firm contracting and the growing importance of production networks to establish a mechanism that connects the increase in rents with this new type of increase in wage inequality

CAHRS hrSpectrum (January - February 2006)

HRSpec06_02.pdf: 166 downloads, before Oct. 1, 2020

Wages Along the Supply Chain: Assessment and Prospects (Fair Labor Association Stakeholder Forum Report)

This document is part of a digital collection provided by the Martin P. Catherwood Library, ILR School, Cornell University, pertaining to the effects of globalization on the workplace worldwide. Special emphasis is placed on labor rights, working conditions, labor market changes, and union organizing.FLA_Stakeholder_Forum_Report_09.pdf: 67 downloads, before Oct. 1, 2020

An Overview and Examination of the Indian Services Sector

India’s service sector has grown rapidly since the 1990s. Domestic demand for services has increased as incomes have risen, triggering the expansion of industries such as banking, education, and telecommunications. Exports have also increased rapidly, led by information technology and business process outsourcing (IT-BPO). India’s ability to offer low-cost, high-quality IT-BPO services has made it a world leader in this industry. However, employment in services has not grown as quickly as output. The majority of India’s jobseekers are low-skilled, but demand for workers is growing fastest in higher-skill industries. The supply of highly-skilled workers has not kept pace with demand, causing wages to increase faster for these workers than for lower-skilled ones. India’s government has supported the growth of service industries through a mix of deregulation, liberalization, and incentive programs, such as the Software Technology Parks of India. Nevertheless, burdensome regulations, poor infrastructure, and foreign investment restrictions continue to affect service firms’ ability to do business. USITC analysis suggests that additional liberalization would lead to an increase in India’s imports of services