Yili (Kevin) Hong
PhD student (MIS)
Fox School of Business, Temple University
Sept 6, 2013
Speakman Hall 200, 10:00am – 1130am
Seminar Title: Three Essays on Global Online Labor Markets for IT Services
I propose three essays to study the dynamics of the information systems-enabled global online labor markets for IT services. Each of these three essay deals with one of the major stakeholders of the market: the service providers, the marketplace intermediary and the employer, with each piece adding a different component on fully understanding the various dynamics of these markets.
In the first essay, I first build a game-theoretic model to understand the service provider’s equilibrium bidding behavior and employer’s winner selection to include global frictions and global labor arbitrage factors, by solving a two-stage game. The analytical analyses provide me with predictions that could be tested empirically. I then use a data set composed of a unique proprietary transaction data from Freelancer matched with five public data sources to test my theoretical predictions on provider pricing and employer selection decisions. By looking at these two aspects, I find global online labor markets are not level playing fields for service providers from countries around the world despite labor arbitrage opportunities, due to global frictions. In the second essay, I exam bidder behavior and auction performance under different auction formats – sealed bid auction versus open bid auctions. First, I derive propositions based on analytical modeling of entry and bidding behavior of service providers under different auction designs (by varying bid visibility – sealed versus open bid). I then use econometric analyses of proprietary transaction data from Freelancer that includes both open bid and sealed bid (hidden from public) to test my propositions. I find sealed bids auctions to attract more bids, albeit on average they have lower contract rate, lower quality bids and offer less buyer surplus and lower buyer satisfaction. In the third essay, I propose a quality-adjusted measure for consumer surplus to estimate the welfare online labor global markets offer to employers. I find online labor markets provide huge surplus to employers, albeit when providers’ actual quality is adjusted, the welfare estimate goes down.
The proposed three dissertation essays provide implications for understanding global frictions, auction mechanism and the societal impact of online labor markets.