Unemployment and Online Labor

47 Pages Posted: 15 May 2018

See all articles by Kathrin Borchert

Kathrin Borchert

Institut für Informatik

Matthias Hirth

University of Würzburg

Michael E. Kummer

University of East Anglia (UEA)

Ulrich Laitenberger

Télécom Paris; ZEW – Leibniz Centre for European Economic Research

Olga Slivko

ZEW – Leibniz Centre for European Economic Research - Information and Communication Technologies Research Group

Steffen Viete

ZEW – Leibniz Centre for European Economic Research

Date Written: 2018

Abstract

Online labor markets experienced a rapid growth in recent years. They allow for long-distance transactions and offer workers access to a potentially ‘global’ pool of labor demand. As such, they bear the potential to act as a substitute for shrinking local income opportunities. Using detailed U.S. data from a large online labor platform for microtasks, we study how local unemployment affects participation and work intensity online. We find that, at the extensive margin, an increase in commuting zone level unemployment is associated with more individuals joining the platform and becoming active in fulfilling tasks. At the intensive margin, our results show that with higher unemployment rates, online labor supply becomes more elastic. These results are driven by a decrease of the reservation wage during standard working hours. Finally, the effects are transient and do not translate to a permanent increase in platform participation by incumbent users. Our findings highlight that many workers consider online labor markets as a substitute to offline work for generating income, especially in periods of low local labor demand. However, the evidence also suggests that, despite their potential to attract workers, online markets for microtasks are currently not viable as a long run alternative for most workers.

Keywords: unemployment, crowdworking, online platform

JEL Classification: D29, D80, H41, J60, L17

Suggested Citation

Borchert, Kathrin and Hirth, Matthias and Kummer, Michael and Laitenberger, Ulrich and Slivko, Olga and Viete, Steffen, Unemployment and Online Labor (2018). ZEW - Centre for European Economic Research Discussion Paper No. 18-023. Available at SSRN: https://ssrn.com/abstract=3178692 or http://dx.doi.org/10.2139/ssrn.3178692

Kathrin Borchert (Contact Author)

Institut für Informatik ( email )

Sanderring 2
Würzburg, 97070
Germany

Matthias Hirth

University of Würzburg ( email )

Sanderring 2
Würzburg, 97070
Germany

Michael Kummer

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Ulrich Laitenberger

Télécom Paris ( email )

46 rue Barrault
Paris, Cedex 13 75634
France

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
Mannheim, 68034
Germany

Olga Slivko

ZEW – Leibniz Centre for European Economic Research - Information and Communication Technologies Research Group ( email )

D-68034 Mannheim
Germany

Steffen Viete

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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