Strategic Responses to Technological Change: Evidence from Online Labor Markets (2403.15262v5)

Abstract: In this project, we examine how freelancers changed their strategic positioning on an online work platform following the launch of ChatGPT in November 2022 - a major advance in AI technologies. We document that post-ChatGPT, freelancers bid on fewer jobs and reposition themselves by differentiating their distribution of bids (i.e., job applications) relative to their prior behavior. We disentangle heterogeneity in strategic responses by exploring how exposure to changes in demand or supply shape incumbent repositioning. We find that the launch of ChatGPT was associated with a short-term decrease in labor demand and an increase in labor supply, though these changes vary across work domains. In response to decreases in labor demand, workers changed their horizontal positioning and withdrew from the platform. In response to increases in labor supply, workers were less likely to decrease bidding or reposition horizontally but shifted their vertical position by targeting lower-value jobs. We further show that repositioning is less likely for high-skill freelancers who face greater adjustment costs. This research contributes to our understanding of how and why workers respond to technological change in the context of recent advances in AI technologies.