Role of communication in online platforms

Online labor markets facilitate matching of workers and employers in a borderless virtual environment. Much of the attraction of these markets for employers derives from access to a large, geographically dispersed pool of workers. However, recent literature highlights that these markets are subject to issues such as employer biases against hiring distant workers and against new workers who lack reputation information. We examine the often-ignored role of pre-contract communication between workers and employers (via the platform-hosted private messaging system), which holds the potential to enhance workers' probability of being hired while mitigating these biases. Based on private messaging activities between workers and employers from nearly half a million job applications on Freelancer.com, we quantify the causal impact on hiring outcomes from workers' outreach to employers via private messaging. We find that initiating private messaging with a potential employer lifts a worker's probability of being hired by roughly 29% over baseline. Moreover, these beneficial effects are amplified when workers reside at a distance, lack reputation, or bear negative reputation, demonstrating that private messaging can in fact attenuate the aforementioned hiring biases. The effects are also magnified when employers lack platform hiring experience, likely because such employers bear higher uncertainty and are more risk-averse.