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CEP discussion paper
Landing The First Job: The Value of Intermediaries in Online Hiring
Christopher T. Stanton and Catherine Thomas
November 2014
Paper No' CEPDP1316:
Full Paper (pdf)

JEL Classification: F16; J30; D02; O30

Tags: labor market intermediation; offshoring; incomplete information

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.

Landing the First Job: The Value of Intermediaries in Online Hiring, Christopher T. Stanton and Catherine Thomas, Review of Economic Studies, Volume 83, Issue 2, April 2016