Working Papers

Learning to hire? Hiring as a dynamic experiential learning process in an online market for contract labor


We know a job applicant’s social category affects an employer’s likelihood of hiring them, but we do not know whether, or how, employers update their beliefs regarding members of these social categories. I examine how prior negative and positive hiring experiences of employees from particular countries affects an employer’s subsequent likelihood of hiring applicants from those countries. Analyses of over 26 million applications, from freelancers worldwide, for over 2.2 million jobs on an online labor market demonstrate that employers react more strongly to negative hiring experiences than positive ones. Employers are 14% less likely (versus 8% more likely) to hire freelancers from a country following a prior negative (versus positive) experience. The similarity of the prior job moderates this effect. Prior negative experiences with similar jobs (versus dissimilar jobs) lead employers to be 92% less likely (versus 7% less likely) to hire from that country. Conversely, positive experiences with similar jobs (versus dissimilar jobs) lead employers to be 23% more likely (versus 3% more likely) to subsequently hire from that country. The consequences for switching countries, following negative experiences, are analyzed and wage differences, made to compensate for employer reactions, are calculated. Contributions to the hiring discrimination, impression formation, and gig-economy literatures are discussed.