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Could online platforms help shift informal workers to formal work?




A new paper in the Socio-Economic Review, co-authored by Johanna Mair, Professor of Organization, Strategy and Leadership at the Hertie School, evaluates shifts in emerging market economies.


In recent years, a host of apps have emerged that connect service users directly with providers – like taxi drivers, cleaners or tutors. People who provide such services have traditionally often worked informally – that is, they are a labour force that tends not to participate in the formal system of work that includes wages, healthcare and pensions, or the income tax or social security system. But since platforms are formal entities that document workers and report and pay taxes, they required the workers they rely on to become part of the formal economy.


A new paper co-authored by Hertie School Professor of Organization, Strategy and Leadership Johanna Mair evaluates how such platforms are managing this transition, focusing in particular on emerging market economies. "Steering the transition from informal to formal service provision: labor platforms in emerging-market countries", co-written by Clarissa E. Weber and Mark Okraku of the University of Göttingen, Mair of the Hertie School and Stanford University Center on Philanthropy and Civil Society, and Indre Maurer, also of the University of Göttingen, was published in March in the Socio-Economic Review (Oxford).


The researchers evaluate a comprehensive set of qualitative data, gathered in interviews with platform founders and employees, workers and industry experts, as well from site visits and archival documents on labour platforms in Panama and Mexico. They examine how platforms steer workers from informal to formal service provision, and detail the interactive process as workers transition to formal services in working with labour platforms.


The study contributes to platform research in general, and opens up paths for new research such as the long-term effects of steering workers to formal service provision, particularly working conditions of those who have left the informal sector, the researchers note. It also establishes a basis for exploring how platforms might interact with governments and public actors in steering such transitions. The paper also contributes to the evolving research on intermediaries that bridge institutional settings. While these have traditionally been NGOs or social enterprises, the study suggests that labour platforms, as for-profit organisations with an economic interest in workers’ transition, can also act as institutional intermediaries.


Read the full paper here.


This article was first published on hertie-school.org: https://www.hertie-school.org/en/news/allcontent/detail/content/could-online-platforms-help-shift-informal-workers-to-formal-work

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