Workers Response to Price Uncompetitiveness: Evidence from a Field Experiment

If and how to regulate online marketplaces is an open question important to both platform designers and policy makers. Using a large field experiment in an online labor market, we analyze the effects of a platform minimum wage. Workers were randomly assigned individual price floors which prevented treated workers from bidding hourly rates below their floor. Workers for whom the floor was likely binding—those historically bidding below the floor—suffered a decline in job-finding probability (30%), but higher wages conditional upon being hired (9%). Treated workers made lower earnings overall, but higher earnings conditional on working at least one hour on the platform. Despite a job being “worth more” if hired, affected workers lowered their search intensity. They did not move to the “uncovered sector”—jobs with a fixed price rather than an hourly wage, nor did they direct their search to better fitting jobs. They were also more likely to exit the platform. After the conclusion of the experiment, the platform rolled out the $3 per hour minimum wage platform wide, allowing us to observe the employment outcomes and job search behavior in equilibrium.