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DTC Seminar Series

Labor Welfare in On-Demand Service Platforms

by

Saif Benjaafar
Department of Industrial and Systems Engineering
Initiative on the Sharing Economy
Institute on the Environment
University of Minnesota

Tuesday, April 2, 2019
3:00 pm reception
3:30 pm seminar

401/402 Walter Library

Saif Benjaafar

There has been rapid growth in platforms that connect workers, acting as free agents, with customers who require a time-sensitive service. This growth has not been without controversy and some observers argue that the expansion of these platforms has come at the expense of workers. One controversial aspect of this growth, and the focus of this talk, is the effort of platforms, such as Uber, to aggressively recruit more workers (presumably to support growth in demand and to improve quality of service to customers by reducing delay in responding to service requests). The growth in the labor pool size is potentially harmful to workers if it depresses wages and dilutes the fraction of demand allocated to each worker, making them less busy. In this talk, taking, taking an operations perspective, we shed light on this debate. Using an equilibrium model that accounts for the interaction between labor supply and demand, we identify two regimes, depending on the level of congestion in the system, one in which an expansion of labor supply improves labor welfare and makes agents busier and one in which an expansion of labor supply harms labor welfare and makes agents less busy. We compare these results to those obtained in a setting where customers are not sensitive to delay and to settings where agents must commit to working a specified amount time and are compensated at a fixed wage rate. We discuss implications for regulation, including regulations involving capping the worker pool or imposing wage floors.

 

Saif Benjaafar is Distinguished McKnight University Professor at the University of Minnesota. He is Head of the Department of Industrial & Systems Engineering at the University of Minnesota, where he also directs the Initiative on the Sharing Economy. He is a founding member of the Singapore University of Technology and Design where he served as Head of Pillar (at the rank of Dean) for Engineering Systems and Design. He was recently named Editor in Chief of the INFORMS journal Service Science. His research is in the area of operations management broadly defined, with a current focus on sustainable operations and innovation in business models, including sharing economy, on-demand services, and digital marketplaces. His papers have been published in various journals including Management Science, OR, and MSOMHis research has been funded by NSF, DOT, DHS, and DARPA in the US and by NRF and MOE in Singapore. His research work has been recognized by numerous awards, including the Harold Kuhn Award, the MSOM Best Paper Award, and the George Taylor Distinguished Teaching Award. He has consulted widely with leading companies and organizations such as Honeywell, General Mills, 3M, and the World Bank, among many others. He served on the Advisory Board of the Keppel Corporation and is currently a member of the Board of Directors of Hourcar.

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