Seminar by Saif Benjaafar

Labor Welfare in On-Demand Service Platforms

Saif Benjaafar

Distinguished McKnight University Professor

Department Head

Industrial and Systems Engineering

University of Minnesota

Wednesday, September 26th, 2018

4:00 – 5:00 pm

144 Baker Systems

1971 Neil Avenue

We study labor welfare in on-demand service platforms that rely on independent agents who decide on whether and how much to work. Such platforms benefit from having access to a large supply of agents, as the availability of more agents implies lower labor cost and shorter customer delays. It has been argued by some labor advocates that this comes at the expense of agents who see, as a consequence of the expansion of labor supply, lower wages and less work. In this paper, we examine the extent to which the interest of platforms in increasing labor supply is indeed at odds with those of agents. Using an equilibrium model that accounts for the interaction between labor supply and demand, we show that factors that affect labor supply, such as labor pool size, delay cost, and variability in the agents' opportunity cost, may have a non-monotonic effect on labor welfare. In particular, 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. (Joint work Jian-Ya Ding, Guangwen Kong, and Terry Taylor).

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.