Online Labor Markets: An Informal Freelancer Economy

Hong, Y. and P. A. Pavlou (2013). Online Labor Markets: An Informal Economy. IBIT Report, February 2013

24 Pages Posted: 15 Mar 2013 Last revised: 22 Apr 2014

See all articles by Yili Hong

Yili Hong

University of Miami Herbert Business School

Paul A. Pavlou

University of Houston - C.T. Bauer College of Business

Date Written: March 1, 2013

Abstract

In this report, we discuss three aspects of online labor markets. First, we give an overview of the current state of major online marketplaces that offer intermediary services for buyer companies and IT professionals with a focus on one marketplace in particular – Freelancer. Second, we show some findings on the measurable economic benefits online labor markets provide to companies that outsource IT services (measured with consumer surplus) and what factors contribute to higher buyer satisfaction. Third, we offer a novel perspective on the frictions that exist in the micro-level interactions between buyer companies and service providers given the global nature of these markets and how reputation signals can alleviate these frictions. Finally, we offer practical implications and recommendations for companies that use these marketplaces to outsource IT services to professionals across the globe.

Keywords: Online Labor Markets, Freelancer, Software Development

Suggested Citation

Hong, Yili and Pavlou, Paul A., Online Labor Markets: An Informal Freelancer Economy (March 1, 2013). Hong, Y. and P. A. Pavlou (2013). Online Labor Markets: An Informal Economy. IBIT Report, February 2013, Available at SSRN: https://ssrn.com/abstract=2132869 or http://dx.doi.org/10.2139/ssrn.2132869

Yili Hong (Contact Author)

University of Miami Herbert Business School ( email )

P.O. Box 248126
Florida
Coral Gables, FL 33124
United States

Paul A. Pavlou

University of Houston - C.T. Bauer College of Business

Houston, TX 77204-6021
United States

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