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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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18720.

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Date of creation: Jan 2013
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Handle: RePEc:nbr:nberwo:18720

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  1. Erik Brynjolfsson & Yu (Jeffrey) Hu & Duncan Simester, 2011. "Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales," Management Science, INFORMS, vol. 57(8), pages 1373-1386, August.
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  3. Abhijit V. Banerjee & Esther Duflo, 2000. "Reputation Effects And The Limits Of Contracting: A Study Of The Indian Software Industry," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 989-1017, August.
  4. Marianne Bertrand & Sendhil Mullainathan, 2003. "Are emily and greg more employable than lakisha and jamal? A field experiment on labor market discrimination," Natural Field Experiments 00216, The Field Experiments Website.
  5. David Autor, 2000. "Wiring the Labor Market," NBER Working Papers 7959, National Bureau of Economic Research, Inc.
  6. Marianne Bertrand & Sendhil Mullainathan, 2003. "Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," NBER Working Papers 9873, National Bureau of Economic Research, Inc.
  7. Sanjeev Dewan & Vernon Hsu, 2004. "Adverse Selection In Electronic Markets: Evidence From Online Stamp Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 497-516, December.
  8. Carlsson, Magnus & Rooth, Dan-Olof, 2007. "Evidence of ethnic discrimination in the Swedish labor market using experimental data," Labour Economics, Elsevier, vol. 14(4), pages 716-729, August.
  9. Dellarocas, Chrysanthos, 2003. "The Digitization of Word-of-mouth: Promise and Challenges of Online Feedback Mechanisms," Working papers 4296-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
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Cited by:
  1. Kevin Yili Hong & Alex Chong Wang & Paul A. Pavlou, 2013. "How does Bid Visibility Matter in Buyer-Determined Auctions? Comparing Open and Sealed Bid Auctions in Online Labor Markets," Working Papers 13-05, NET Institute.
  2. Ajay Agrawal & John Horton & Nicola Lacetera & Elizabeth Lyons, 2013. "Digitization and the Contract Labor Market: A Research Agenda," NBER Working Papers 19525, National Bureau of Economic Research, Inc.

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