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Can remote work help rural labour markets?

Can remote work help rural labour markets?

Published on
28 Jun 2022
Written by
Fabian Braesemann and Vili Lehdonvirta
The Internet promised to spread economic opportunities to rural areas, but employment trends show the opposite. Prof Vili Lehdonvirta and Dr Fabian Braesemann discuss whether online labour platforms can help counter this trend.

While the Internet has long been predicted to spread economic opportunities to rural areas, the actual trend in the 21st century has been the opposite. Knowledge spillovers have fuelled urbanisation and pulled job-seekers into large cities, increasing the gap with rural areas—despite early promises, the Internet has so far failed to turn the world into a “spaceless city”.  However, in their new article, “ICTs and the Urban-Rural Divide: Can Online Labour Platforms Bridge the Gap?Fabian Braesemann, Vili Lehdonvirta, and Otto Kässi argue that online labour platforms might have started to counter this trend.

Analysing data from a leading online labour platform in more than 3,000 urban and rural counties in the United States, they find that rural workers made disproportionate use of the online labour market. Rural counties also supplied, on average, higher-skilled online work than urban areas. As use of online labour platforms continues to grow rapidly, they ask whether these platforms might finally alleviate the urban-rural divide, and bring new economic opportunities to the countryside.

We caught up with Fabian and Vili to discuss the potential and limitations of online labour platforms for regional economic development.

David: Could you first define what you mean by an “online labour platform”. What were the workers in your dataset actually doing?

Fabian / Vili: The data we looked at comes from one of the globally leading platforms for so-called ‘online freelancing’. These platforms mediate all kinds of short-, mid- and long-term projects that do not require face-to-face interaction, such as website development, graphic design, accounting, statistical analysis, programming or writing and translation. This type of platform is distinct from other platforms that mediate place-bound types of jobs, such as Uber, or so-called clickwork platforms such as Amazon Mechanical Turk, which focus mainly on micro-tasks.

David: How significant is this sector, both in terms of the national economy, but also in individual workers’ lives? ie would anyone ever set out for a career in this sort of work, or is it basically a stop-gap? And is it possible to even define a sector of “online workers”?

Fabian / Vili: Compared to overall labour markets, these online markets are still very small. The number of registered online freelancers is estimated at around 150 million people globally. However, many of these individuals will not have done any online jobs or only very few. While it is difficult to provide concrete numbers on the total size of the online labour market, it is clear that the market is growing quickly, at around 20% annually.

Regarding the second part of your question, we know that online freelancing is a part-time job for some, but a main source of income for many, particularly in Global South countries. Individuals with IT-related skills use these platforms as a chance to obtain promising job opportunities with employers from other parts of the world. There is plenty of evidence, however, that there is a huge competition for some types of online jobs that can lead to precarious working conditions for online workers.

In the future, online labour markets could become a major source of work and income for many people – this is why we need to understand the mechanisms of supply and demand on these platforms, so that they can become a tool for sustainable economic empowerment and not one for precariousness and exploitation.

David: You say that your findings for online platforms buck the trend of skilled work basically being an urban phenomenon: why do you think this is? Is it just that skilled urbanites probably have alternatives to online work? Or is there something about these platforms that facilitates more complex remote-working arrangements for the first time?

Fabian / Vili: In the past – and there is data suggesting that this is not only going to continue but to become more pronounced in the future – urban centres have been the place of innovation and business opportunities. This is why we have seen a steady trend towards more urbanisation for a very long time. Online labour platforms could theoretically overcome this economic law, as people need only a computer and internet connection to plug into these platforms. However, the distribution of technical skills that are the requirement for people to obtain good online jobs are still determined by place-bound institutions, which most often cluster in cities. Therefore, we do not see a complete liberation from distance on these platforms. It is rather that most online jobs go to metropolitan areas (even if they are at the other end of the globe) or to regions that are in some proximity to large cities. In general, specialists in rural environments might be the group that benefits most from online work arrangements, as they can leverage their skills online, but enjoy a more affordable lifestyle in their rural surroundings.

David: The question of where you can work probably depends a lot on what you’re actually doing—with high-value workers able to define their work lives to a greater extent than low value. You say platforms disproportionately benefited skilled workers in rural areas—perhaps skilled workers will always be fine, wherever they are?

Fabian / Vili: Exactly. In the global online labour market the laws of supply and demand work largely unrestrained. As a result, people with scarce and in-demand skills will be better off than those with skills that are abundant. People with in-demand skills will most likely be located in environments that have specialised training and business opportunities, that is urban areas, but there are also some online freelancers that offer technically specialised types of jobs in rural areas.

David: Any urban-rural comparisons will probably need to control for things like age, poverty, etc. How easy is it to pick apart the complex question of “urban-rural divides”—particularly when you also bring migration into the mix? Can we really say anything useful other than the obvious,  i.e. that “the Internet changes a lot, but not everything”?

Fabian / Vili: Deriving robust statistical findings from the raw platform data is actually the main part of the overall work on the study. The online data is noisy with outliers and a lot of data cleaning and preparation that needs to be done prior to analysis. Then, we also need to match the geographical data to official regional statistics in order to introduce the important control variables you just mentioned and to make any statements about regional drivers of online labour markets. Having done all of this, we could identify a few of these drivers: overall it is regions with a competitive edge in IT-related sectors of the economy, good education and internet infrastructure that host the most active online freelancer communities. Again, these factors are also favouring the distribution of relevant skills and therefore drive online labour market participation.

David: And now for the inevitable COVID-19 question! What do you think of your findings in the light of the ongoing situation? I guess the lockdowns (and consequent impact on the economy) present a perfect natural experiment for how far we can rely on purely digital connections in our working lives?

Fabian / Vili: Absolutely, COVID-19 has made many parts of the overall online labour market similar to online labour platforms. It definitely drove the adoption of remote work practices and related digital technologies such as videoconferencing. During the pandemic some people have started to speculate about the end of the central business district and the dissolution of the city itself. Our study’s results speak directly to these views: even though people can now, more than ever, collaborate digitally, this will not make distance obsolete. People will continue to be located in proximity to large agglomerations, because this is where complex economic activities such as research or innovation take place – and these types of activities are becoming more important.

David: Finally—we’re seeing lots of discussion about a desire for more flexible working, more home working, less (destructive) air-travel, cutting down working hours, etc. Do you think we might see any lasting structural changes to the way we work—or is this basically something for the better-off middle classes to look forward to?

Fabian / Vili: It is still early days to talk about lasting changes to the labour market because of the pandemic, but it is probably fair to assume that the trend towards more digitalisation of work is only being amplified by the pandemic. This will certainly involve the substitution of some work-related travel and more digital interactions, but the data from the online labour platform we investigated in our study supports the view that at least the large-scale spatial distribution of work is not going to change dramatically from urban to rural areas. To the contrary, as digital interactions allow specialists to benefit from increased demand online, it could actually lead to a situation, where urban specialists benefit disproportionately from increased visibility on online platforms while people in rural areas increasingly fall behind.

Read the full paper: Fabian Braesemann, Vili Lehdonvirta, and Otto Kässi (2020) ICTs and the Urban-Rural Divide: Can Online Labour Platforms Bridge the Gap? Information, Communication & Society. 25:1, 34-54, DOI: 10.1080/1369118X.2020.1761857

Dr Fabian Braesemann is a Research Fellow and Data Scientist at Saïd Business School and Research Associate at the Oxford Internet Institute.  He investigates social processes using a multitude of different online data sets in domains as diverse as marketing, real estate,  innovation, online freelancing, and political extremism. He tweets at:@FBraesemann.

Prof. Vili Lehdonvirta is an economic sociologist whose research focuses on digital technologies, such as apps, platforms, and marketplaces — how they are governed, how they shape the organization of economic activities, and with what implications to workers, consumers, businesses, and policy. He is a Professor of Economic Sociology and Digital Social Research at the Oxford Internet Institute, University of Oxford tweets at: @ViliLe.

Fabian and Vili were talking to David Sutcliffe, OII Science Writer.

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