Leveraging the internet as a data source of social science, and labor economics in particular, is the main research mission of IDSC, IZA’s research data center.
Market transactions, including the labor market (e.g. job boards) but extending into the marriage market (e.g. Tinder), the transportation (e.g. Uber) or the information market (e.g. Google) and beyond, take place online because information and communications technology naturally optimizes the main purpose of markets: the matching of supply and demand.
While for market participants (end users) participation is non-invasive through the adoption of personal technology (smartphones bring markets in their pocket), digital technology allows market operators to experiment live and to seamlessly record transactions with rewind and replay capabilities so that studying and understanding markets depends heavily on access to such transaction data.
Organized by Nikos Askitas and Peter J. Kuhn, a two-day workshop brought together economists and computer scientists from academia and practice to showcase research with data from internet job boards, one of the main modes of matching facilitation in labor markets worldwide today. The workshop, jointly organized and financed by the IDSC of IZA and the Center of Advanced Internet Studies (CAIS), was hosted by CAIS in Bochum.
Participants had a chance to interact and program industrial robots and other intelligent industry 4.0 means of production during a visit of the University of Bochum’s Learning Factory, which is a real industrial production site as well as a multidisciplinary training and education site. They were also given a guided tour of the German Mining Museum in Bochum, which hosts several generations of functioning mining technologies in a tunnel system 17 meters below the earth.
See the workshop program for a full list of presentations, some of which are summarized below.
As markets thicken, so does the plot
In her presentation on “Search, Selectivity and Market Thickness in Two-Sided Markets,” Jessica Yu reported results from field experiments on an internet dating platform that manipulate the participants’ perceptions of market thickness. As expected, participants raise their matching standards in response to increases in participation on the “other” side of the platform (e.g. men versus women, or firms versus workers), and reduce their standards when participation on their own side increases. Estimates from a two-sided search model suggest that increases in overall participation raises welfare.
Changes in the supply and demand for skills
Alicia Modestino presented joint work using a novel database of 87 million online job postings aggregated by Burning Glass Technologies. The authors test and verify the hypothesis that changes in skill requirements within some occupations have reduced the matching efficiency within some classes of jobs, which contributed to the outward shift in the Beveridge Curve since 2007, i.e., higher unemployment coinciding with more vacancies.
Labor market tightness and wages
Reamonn Lydon and his co-author found that “big” data from Indeed closely track vacancy data from firm-level official surveys while they are delivered in a more timely fashion. Moreover, they are more granular in the information they contain about what jobs employees search for, what skills employers want, and what the wage levels of various roles are. Controlling for observable job characteristics and traditional tightness measures, such as regional unemployment, the paper finds that the number of clicks on a posting is a strong predictor of wages posted in job vacancies.
The 3rd IDSC of IZA workshop on matching jobs and workers online, co-financed by and organized with the University of Luxembourg, will take place at IZA in Bonn on September 18-19, 2020.