Monopsony in Online Labor Markets
On-demand labor platforms make up a large part of the “gig economy.” We quantify the extent of monopsony power in one of the largest on-demand labor platforms, Amazon Mechanical Turk (MTurk), by measuring the elasticity of labor supply facing the requester (employer) using both observational and experimental variation in wages. We isolate plausibly exogenous variation in rewards using a double-machine-learning estimator applied to a large dataset of scraped MTurk tasks. We also re-analyze data from 5 MTurk experiments that randomized payments to obtain corresponding experimental estimates. Both approaches yield uniformly low labor supply elasticities, around 0.1, with little heterogeneity.
We thank Gary Hsieh and Panos Ipeirotis for sharing data as well as Bentley Macleod, Aaron Sojourner, and Glen Weyl for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Some of this research was undertaken while Naidu was a visiting/consulting researcher at Microsoft Research New York.
Arindrajit Dube & Jeff Jacobs & Suresh Naidu & Siddharth Suri, 2020. "Monopsony in Online Labor Markets," American Economic Review: Insights, vol 2(1), pages 33-46.