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Landing The First Job: The Value of Intermediaries in Online Hiring

Author

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  • Christopher Stanton
  • Catherine Thomas

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.

Suggested Citation

  • Christopher Stanton & Catherine Thomas, 2014. "Landing The First Job: The Value of Intermediaries in Online Hiring," CEP Discussion Papers dp1316, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1316
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    Cited by:

    1. Arimoto, Yutaka & Machikita, Tomohiro & Tsubota, Kenmei, 2018. "Broker versus social networks in adverse working conditions: cross-sectional evidence from Cambodian migrants in Thailand," IDE Discussion Papers 686, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    More about this item

    Keywords

    Labor market intermediation; Offshoring; Incomplete information;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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