The Ruble Collapse in an Online Marketplace

Research Seminars: ZEW Research Seminar

Some Lessons for Market Designers

The sharp devaluation of the ruble in 2014 increased the real returns to Russians from working in a global online labor marketplace, as contracts in this market are dollar-denominated. Russians clearly noticed the opportunity, with Russian hours-worked increasing substantially, primarily on the extensive margin—incumbent Russians already active were fairly inelastic. Contrary to the predictions of bargaining models, there was little to no pass-through of the ruble price changes in to wages. There was also no evidence of a demand-side response, with buyers not posting more "Russian friendly" jobs, suggesting limited cross-side externalities. The key findings—a high extensive margin elasticity but low intensive margin elasticity; little pass-through into wages; and little evidence of a cross-side externality—have implications for market designers with respect to pricing and supply acquisition.

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Online

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Prof. John J. Horton

John J. Horton // MIT Sloan School of Management, Cambridge, USA

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