We study platform labor from the perspective of labor monopsony. We start from exploring the size and trend of the domestic platform labor market and the current status of social protection available to platform workers. Extending the often-discussed nature of platform work, we shift our attention to the defining characteristics of digital platforms and the link between product and labor market competitions, focusing on labor supply elasticity with respect to wage and monopsony power. We conduct empirical studies in two distinct areas: the IT freelance market and the food delivery app market. In the context of the IT freelance market, we estimate the elasticity of labor supply by analyzing data collected from a Korean IT freelance platform via web-scrapping. The findings show that the monopsony power of the freelance platform is relatively minimal, suggesting a positive effect of the platform in fostering thicker markets. In contrast, for the food delivery app market which expanded rapidly during the COVID-19 period, a survey of riders unveils certain limitations related to multi-homing and platform switching, thereby signifying a potential for monopsony power in this sector. Extended analyses using app-use data combined with large-scale labor surveys show a downward wage trend with an increase in market concentration―despite stable or even growing employment levels. This pattern contradicts the traditional expectations under labor monopsony, which usually involves negative impacts on both employment and wages. Instead, our findings suggest an asymmetry in bargaining power. We conclude with overarching implications on competition and labor policies, focusing on platform’s monopsony power.

Publisher's Note
Summary

Chapter 1 Introduction

Chapter 2 Labor Transactions through Online Platforms
Section 1 Labor Market based on Online Platforms
Section 2 Scale and Trends of Platform Workers
Section 3 Demographic Characteristics and Working Conditions of Platform Workers
Section 4 Institutional Protection and Social Safety Nets for Platform Workers

Chapter 3 Market Dominance and Monopsony Power in the Platform Economy
Section 1 Market Dominance and Monopsony Power
Section 2 Monopsony Power in the Online Platform Economy
Section 3 Empirical Studies on Monopsony Power in the Platform Labor Market

Chapter 4 Monopsony Power in the Online Labor Market: Focus on Software Developers in the ICT Field
Section 1 Online Labor Market and Monopsony Power
Section 2 Software Developers in the ICT Field
Section 3 Data
Section 4 Estimation Equation
Section 5 Estimation Results
Section 6 Conclusion

Chapter 5 Monopsony Power in the Online Labor Market: Focus on the Delivery App Market
Section 1 Conceptual Framework
Section 2 Analysis of Rider Surveys: Emphasis on Multi-homing and Switching
Section 3 Empirical Analysis of Competition and Wages in the Delivery App Market
Section 4 Conclusion

Chapter 6 Policy Discussion for the Protection of Platform Workers

References

Appendix