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

Abstract

This paper studies why outsourcing intermediaries have arisen within online hiring markets. The main …nding is that third-party intermediaries provide employers with information that facilitates hiring. They do not increase worker productivity directly or coordinate teamwork. Intermediary a ¢ liation signals that a ¢ liated workers are high-quality compared to independent contractors. This preempts quality revelation on the job and mitigates ine ¢ ciently low rates of inexperienced worker hiring. Intermediaries can provide credible certi…cation because a ¢ liated workers share common o ine backgrounds. A ¢ liation is most valuable for highlyskilled workers in developing countries, suggesting that incomplete information impedes the o¤shore production of skill-intensive tasks.