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

This paper studies why outsourcing intermediaries have arisen within online hiring markets. The main finding is that third-party intermediaries provide employers with information that facilitates hiring. They do not increase worker productivity directly or coordinate teamwork. Intermediary affiliation signals that affiliation workers are high-quality compared to independent contractors. This preempts quality revelation on the job and mitigates inefficiently low rates of inexperienced worker hiring. Intermediaries can provide credible certification because affiliated workers share common offline backgrounds. Affiliation is most valuable for highly-skilled workers in developing countries, suggesting that incomplete information impedes the offshore production of skill-intensive tasks.