APPENDIX: COUNTRY CASE STUDIES
Online talent platforms will not create the same kind of impact in every economy.
The potential varies greatly depending on each country’s starting point in terms of
demographics, labor market characteristics, digital infrastructure, and patterns of
consumption. This supplement to the McKinsey Global Institute report A labor market that
works: Connecting talent with opportunity in the digital age describes these variables and
how they affect our estimates of the economic potential in seven of the world’s largest
For any country, GDP can be determined by multiplying the amount of valued-added output
per worker (also called labor productivity) by the number of workers actively employed in
the economy. Online talent platforms have the potential to influence the number of people
employed and hours worked by reducing job search time and enabling people out of
the workforce to find meaningful freelance or part-time work. They also increase labor
productivity by creating better matches between workers and jobs, and by shifting people
from informal to formal employment. (See the separate technical appendix for a more
detailed discussion of how digital platforms raise GDP and employment.
Our analysis began with a detailed examination of the seven countries covered in this
appendix: the United States, the United Kingdom, Germany, Japan, China, India, and Brazil.
These economies account for approximately 60 percent of world GDP and 50 percent of the
world’s population; they represent a mix of advanced and emerging economies as well as
very different labor markets and demographic conditions. The indicators affecting GDP and
employment in each country are described below, along with our projections for how online
talent platforms could increase GDP and employment by 2025—all of which are based on
Advanced economies are environments that are ripe for online talent platforms to take
off. They have more sophisticated and extensive digital infrastructure as well as higher
Internet penetration, which creates conditions for greater impact. They also have more
educated and productive labor forces overall, so the output that can be captured by
raising employment or enabling better matches between workers and jobs is higher. Talent
platforms are expanding into emerging economies as well. But these countries are starting
with lower levels of education, output per worker, and wages as well as lower Internet
usage (although mobile usage in particular is rising rapidly). These factors tend to dampen
the potential of online talent platforms to raise GDP and employment. However, for many
countries, these factors are more than offset by the larger opportunity for emerging regions
to shift people out of informal employment and into formal work.
THE UNITED STATES
The United States stands to gain significant economic benefits from online talent
platforms—in fact, it is near the top of the list of advanced economies in terms of potential
impact. This may seem surprising, given that the US economy is starting from a position
of relative strength, but there is substantial room to make its job market and talent pipeline
The United States has a dynamic labor market but declining participation
The first crucial variable we examine is the size of the labor force. Like most advanced
economies, the United States has an aging population. But it faces milder headwinds
from this demographic shift than many peer economies. Its working-age population
has continued to expand by 1.1 percent annually since 1980, far more than the rate of
0.4 percent in the United Kingdom, 0.2 percent in Germany, and 0.1 percent in Japan
during the same period. Furthermore, the US working-age population will continue
expanding through 2025, although growth will slow to a modest 0.2 percent. By contrast,
the working-age population has already begun to shrink in Germany and Japan, a trend that
Despite relatively favorable demographics, a significant share of the 202 million working-age
adults in the United States is economically underutilized.2 Some 77 million (or 38 percent)
are unemployed, inactive, or working only part-time (Exhibit C1). Individuals who have
attained at least four-year college degrees make up approximately 18 percent of this
group, representing a tremendous pool of human capital. In addition, the US labor force
participation rate has declined to almost a four-decade low, dropping below the rate in other
advanced economies. In the wake of the Great Recession, many young people remained in
school, people near the end of their careers were forced to retire earlier than planned, and
discouraged workers stopping looking altogether. But declining labor force participation
also reflects a longer-term trend: the rate for working-age men has been steadily eroding
since 1980. The ranks of working women grew until the early 2000s, but the trend has since
reversed, with women’s participation rates declining to the same level as in 1986. Today only
two-thirds of US women work—a smaller share than in Scandinavia (around 75 percent) or
even Germany (73 percent).
The US unemployment rate reached a peak of 9.9 percent in the fourth quarter of 2009
but has fallen to 5.5 percent as of May 2015. Across all age groups and education levels,
however, unemployment still remains above pre-crisis levels. Unemployment is particularly
high among young people from ages 15 to 24 (at 12.6 percent), and it is lowest among those
over age 55. The unemployment rate for individuals with a college degree or more is just
2.9 percent, compared to 8.6 percent for people with less than a high school degree. In
addition, around one out of every four unemployed Americans has been out of work for over
a year, which increases the difficulty of reentering the workforce.
The US labor market has always been relatively dynamic, with a high share of workers
changing jobs each year. This is healthy, as it enables young people to enter the workforce
and reflects people moving around in their careers. However, labor market fluidity has
been declining over the long term, with fewer people making a change each year. Job
changes are positively correlated with economic growth and rising wages, which makes
the downward trend worrisome. In parallel, fewer people are moving to new locations. From
1950 through 1990, one in five individuals moved in the United States each year, and roughly
half of those were moves across county or state lines. Since 1990, however, that rate has
fallen by half; today only one in ten Americans moves in a given year (Exhibit C2). Despite
these trends, the United States still has one of the most fluid labor markets in the world on
these two dimensions. One out of every four US workers has gotten a new job in the past
year, and 11.5 percent of the population moved geographically.
Microeconomic survey evidence suggests that there is significant potential for online
talent platforms to speed job searches and enable people to find jobs that are a better fit.
In a 2014 survey by Manpower, 32 percent of US employers reported difficulties finding
the right talent. Among the occupations that were most difficult to fill were positions in the
skilled trades, drivers, and administrative support roles. At the same time, a 2014 survey of
LinkedIn members finds that 36 percent of US workers feel overqualified for their current
jobs. In addition, 35 percent of part-time workers report that they would like to work more
hours for a proportional pay increase.
Technology can play a large role in making the labor market more efficient. Overall, some
85 percent of Americans use the Internet, and US companies have developed most of
the world’s largest online talent platforms. By the end of 2014, LinkedIn, for instance, had
115 million US members, which is equivalent to 73 percent of the country’s workforce.
The ride-sharing service Uber, launched in the summer of 2012, had 160,000 drivers in
the United States by the end of 2014, meaning that on average, seven new active drivers
were added every hour during this period. Its robust usage of the Internet, social media,
and online talent platforms positions the United States to make full use of these tools in the
By 2025, online talent platforms could raise US GDP by 2.3 percent
If the United States makes the most of online talent platforms, we estimate that they
could add 2.3 percent (or $513 billion) to annual GDP by 2025. They could also increase
employment by 2.7 percent (4.1 million full-time-equivalent positions), while nearly 41 million
people could benefit in various ways (Exhibit C3).
The largest GDP impact comes from drawing inactive adults (including stay-at-home
mothers, newly retired people, and students) into the workforce and increasing the hours
worked by part-timers—whether through helping them find permanent full-time employment
or connecting them with flexible freelance assignments. Increased participation accounts
for roughly half of the expected impact in the United States, raising GDP by 1.1 percent and
benefiting some 12 million people.
US workers are more likely to leave jobs and seek new employment than those in other
countries, and employers are more likely to make new hires and undertake layoffs when
needed. This means that conditions are in place for online talent platforms to have a large
impact through cutting job search time and filling vacancies more quickly, which reduces
the number of people who are unemployed at any given time. This effect raises GDP by
0.6 percent by 2025, increasing employment by 1.5 million full-time-equivalent positions and
benefiting nearly 23 million individuals.
Since the US workforce is well educated (42 percent of adults have tertiary degrees),
creating better matches between workers and jobs can have a significant productivity
impact. This would raise GDP by 0.4 percent and benefit some five million individuals.
Our estimate of the economic potential of online talent platforms in the United States is
conservative. As a leader in high-tech innovation and adoption of new Internet-based
business models and technologies, the United States is uniquely positioned to harness
the capabilities of online talent platforms to solve some of its persistent problems with job
matching and skills development.
THE UNITED KINGDOM
The United Kingdom stands to enjoy the second-largest potential economic benefit from
online talent platforms among the advanced economies we analyzed. Much of this comes
from improving opportunities for the substantial population of part-time workers. The UK
labor market is relatively fluid, and much of the country’s population is comfortable using
online tools—two favorable conditions for talent platforms to have an impact.
UK labor force participation is strong, but the country’s job market is becoming
Like the United States, the United Kingdom will continue to see positive growth in the size
of its labor force through 2025, due in part to immigration. The working-age population
has grown at 0.4 percent annually since 1965 and is projected to grow at an annual rate of
0.2 percent through 2025.
Yet a large and growing share of the population is underutilized. More than 40 percent of the
working-age population is unemployed, inactive, or working only part-time. This translates
into 17 million people (Exhibit C4). Labor force participation among working-age men has
declined by five percentage points since 1990. However, the growing ranks of working
women have held the overall participation rate steady at around 77 percent. About half of
women and 30 percent of men who did not complete secondary school do not participate in
Moreover, part-time employment in the United Kingdom is pervasive. In 2014, more than
10 percent of male workers and more than 40 percent of female workers worked less
than full-time. An even larger share of young people work part-time: some 30 percent of
young male workers and nearly half of young female workers are part-timers. Overall, some
13 percent of British people of working age work part-time—more than twice the share
in the United States. According to a LinkedIn survey, more than a quarter of British parttimers
would like to work additional hours for a proportional pay increase. There is a large
opportunity to help this population find full-time positions or add hours through platforms for
The overall unemployment rate in the United Kingdom was 5.4 percent in 2007, peaked at
9.2 percent at the end of 2011, and now stands at 6.3 percent. As in the United States and
many other countries, the unemployment rate is much higher among youth and those with
little education. The youth unemployment rate rose from just under 14 percent before the
recession to more than 21 percent at the peak in 2011; it still stood at 15.2 percent at the
end of the first quarter of 2015. The jobless rate for those who did not complete secondary
school remained at 11.8 percent at the end of 2014, far above the 2.8 percent rate for college
graduates. Moreover, 36 percent of the unemployed have been out of work for more than
Labor market fluidity is relatively strong but declining in the United Kingdom (Exhibit C5).
The share of the population that moves across regions has remained relatively stable since
1980, at roughly 3.2 percent per year. This is similar to the share of the US population that
moves across county or state boundaries (4 percent). However, the United Kingdom has
seen a sharp decline in people changing jobs in a given year. In 2000, one out of every five
individuals had his or her job for less than a year, but that share had dropped to one out of
eight by 2013. But while the share of workers whose current job tenure is less than one year
is much lower than in the United States, it is still higher than in Germany, France, Italy, and
The United Kingdom has a skilled labor force. More than 40 percent of its working-age
population has a tertiary degree, and the share is nearly 50 percent among ages 25 to 34.
This sets the stage for online talent platforms to create significant impact through better
matches and faster matches.
As in other countries, there is evidence of a skills mismatch in the United Kingdom. While
its system has produced many graduates with tertiary degrees, nearly 50 percent of recent
university graduates and 35 percent of non-recent university graduates work in jobs that do
not require their degrees, according to the Office for National Statistics. Fourteen percent
of employers surveyed by Manpower reported difficulties in finding the right talent, while
39 percent of UK members surveyed by LinkedIn felt overqualified for their current roles.
There is a clear opportunity for better signaling regarding the skills and occupations that are
Internet penetration, which stands at 89 percent today, is projected to hit 97 percent by
2025. Online talent platforms are taking hold rapidly in the United Kingdom, which has the
highest adoption rate in Europe. By the end of 2014, LinkedIn had more than 18 million UK
members, which is equivalent to one-quarter of the working-age population.
By 2025, online talent platforms could raise the United Kingdom’s GDP by
We calculate that online talent platforms could boost UK GDP by 2.0 percent ($68 billion)
annually in a decade’s time. They could increase employment by 2.5 percent (adding
800,000 full-time-equivalent positions), while benefiting nearly seven million people through
faster job searches, better matches, and new opportunities to participate in the workforce
(Exhibit C6). The impact in the United Kingdom is the third-largest among the seven focus
countries relative to GDP.
As in many other countries, the largest effect stems from increasing participation and hours
worked. A quarter of UK workers are part-time, and some 27 percent of those surveyed
would like to work more hours.4 Online talent platforms can provide new opportunities to do
so, while also mobilizing the inactive population. This aspect accounts for a GDP boost of
0.9 percent ($31 billion). It can also create 500,000 full-time-equivalent positions, boosting
employment by 1.4 percent and benefiting up to 2.4 million individuals.
The second-largest impact comes from reducing job search time through faster matches.
The average duration of unemployment is 11 months in the United Kingdom, compared
to 8.5 months in the United States. Reducing this by 13 percent through more efficient job
searches could add 0.5 percent to annual GDP, raising employment by 1.0 percent and
benefiting three million people. Finally, the productivity increase associated with putting a
well-educated labor force into better matches boosts GDP by 0.4 percent.
We find that online talent platforms will likely have a more modest impact in Germany than
in the United States or the United Kingdom. Germany already has a low unemployment rate
and a relatively high labor force participation rate, although many women work part-time.
This reduces the potential for raising participation and lowering unemployment—the two
largest impacts associated with these platforms in advanced economies. In addition, the
German labor market is not very fluid in relative terms, and it has a lower rate of online talent
platform adoption to date than the United States or the United Kingdom. All of these factors
limit the potential impact.
Germany has rising labor force participation and low unemployment, but many
Germany is already feeling the effects of the global aging trend; its working-age population
peaked in 2000 and has been declining ever since. The old-age dependency ratio (the
population over the age of 65 divided by those ages 15 to 64) is 32 percent, the third-highest
in the world after Japan and Italy. This means that there are only three people of working
age to support each elderly person in society—and that ratio is growing. The pressure of
an aging population makes labor force participation and employment vital for sustaining
In contrast to most advanced economies, Germany has seen its labor force participation
rate increase over time. From 1990 to 2014, the rate for men has increased just slightly
to 83 percent, while the rate for women climbed sharply, from 58 percent to 73 percent
(Exhibit C7). As a result, Germany’s overall participation rate has risen by 8 percent during
a period that spanned the Great Recession. The rate held steady due in part to the worksharing
scheme implemented by the government to avoid mass layoffs. As a result, only
21 percent of Germany’s working-age population is not in the labor force (compared to
28 percent in the United States).
Germany’s unemployment rate is among the lowest in our focus countries across all
age groups. Although young people are more likely to be unemployed, Germany’s youth
unemployment rate of 7.7 percent (as of 2014) is much lower than the levels seen throughout
most of Europe. The proportion of German youth who are unemployed and also out of
education or training is only about 10 percent. This reflects the tight labor market created
by aging pressures but also an education system that does an effective job of connecting
apprentices with opportunities and careers.
Despite relatively high rates of labor force participation and a low unemployment rate,
Germany has an opportunity to better utilize its human capital. Thirteen percent of the
working-age population works only part-time, on par with 12 percent in the United Kingdom
and more than twice the share in the United States (6 percent). There is a significant gender
gap in this indicator: while less than 10 percent of employed German men work parttime,
45 percent of employed German women do so. Because of prevalence of part-time
employment, some 40 percent of Germany’s working-age population is economically
underutilized, about the same share as the United States. This translates into 21 million
people who could work more hours (see Exhibit C7).
As in other countries, many Germans do not feel their current jobs fully utilize their skills
and potential. In a recent LinkedIn survey, 40 percent of German respondents said
they felt overqualified for their current jobs. The OECD finds that nearly 20 percent of
German employees think that their work environment is stressful, compared with less
than 10 percent in the Netherlands and Denmark. Germany has a highly educated and
skilled labor force, so this suggests a real opportunity for online talent platforms to boost
productivity and wages by connecting people to the right jobs.
But relatively low labor market fluidity may limit the ability of online talent platforms to
tackle these issues (Exhibit C8). Only 6.5 percent of the population moves within the same
state each year—well below the 11.5 percent of Americans who move (although interstate
migration rates are very similar, with 1.9 percent of the German population making interstate
moves each year, compared to 1.6 percent of Americans). Just one out of every seven
Germans changes jobs every year, much lower than in the United States or the United
Kingdom. Lack of turnover in the job market may reflect a lack of information about new
job opportunities (which online talent platforms could address), but it may also reflect
To date, workers in Germany have been slower than those in the United States or United
Kingdom to use online talent platforms. LinkedIn has only four million members in Germany,
while Xing has about 11 million users. Combining the two (without removing duplicates)
would yield 27 percent of the working-age population—compared to 73 percent of the US
working-age population currently on LinkedIn alone. Our interviews with experts suggest
that there is a social reluctance to networking for new work opportunities in a digital
forum. And, since a significant share of young people are already connected with work
opportunities through apprentice programs that combine work and schooling, they have
less need and motivation to use online platforms.
By 2025, online talent platforms could boost Germany’s GDP by 1.7 percent
We find that online talent platforms could boost Germany’s GDP by 1.7 percent ($70 billion)
annually in a decade’s time. They could increase employment by 1.9 percent (creating
700,000 full-time-equivalent positions) while benefiting nearly seven million Germans
through shorter job searches, better job matches, and new opportunities to participate and
add hours (Exhibit C9).
The largest impact would come from enabling part-time workers to increase their hours.
This is significant, since one-quarter of the labor force works only part-time, and some
23 percent would like to work more hours. This effect could boost GDP by 0.8 percent,
or $33 billion annually, while benefiting three million people and creating 500,000 fulltime-
equivalent positions. The second-largest impact comes from boosting productivity
by connecting individuals with jobs that are a better fit. This could generate a 0.5 percent
increase in annual GDP (or $15 billion) while benefiting more than one million individuals.
Given the lower rate of job turnover, the impact from reducing search time and enabling
new matches is lower in Germany than in other countries (0.4 percent of GDP, compared to
0.6 percent in the United Kingdom and 0.7 percent in the United States).
Among the advanced economies we analyzed, Japan has the lowest potential for economic
impact from online talent platforms due to its already-low unemployment rate and its rigid
Japan has an aging labor force, pervasive irregular employment, and a large
share of women working part-time
Japan is the country at the leading edge of the global aging trend. Its working-age
population peaked in 1995 and has been shrinking by 0.7 percent annually ever since. The
country’s old-age dependency ratio (the number of people over the age of 65 compared to
those of working age) is 41 percent, the highest in the world.
Labor force participation is a vital engine for economic growth in the face of these
demographic headwinds. However, some 37 million people, or nearly 50 percent of Japan’s
working-age population, are inactive, unemployed, or working only part-time (Exhibit C10).
The biggest factor behind this underutilization is the prevalence of part-time employment.
Some 19 percent of the working-age population works only part-time, compared to
12 percent in Germany and just 6 percent in the United States. This is a particularly issue
among Japanese women. Median earnings are 27 percent lower for women than for men,
a much larger gap than in other advanced economies such as the United States and the
United Kingdom (18 percent), Germany (17 percent), or Sweden (15 percent). This is due in
part to tax incentives that favor single-income households, leading many women to opt for
part-time work that keeps them just under the eligible threshold.6 Closing the gender gap
in the workforce has been high on the Japanese policy agenda, since mobilizing this highly
educated talent pool could provide a major economic boost to an aging society.
The labor force participation rate for Japanese men is among the highest in the world and
has remained stable for many years at around 85 percent. For women, it has been climbing,
from 57 percent in 1990 to 65 percent in 2014 (although many women work part-time, as
noted above). As a result, the overall participation rate has risen by 5 percent, compared
with a 4 percent decline in US during the same period. Despite the fact that the participation
rate among working-age women has been improving, it remains lower than in Germany
(72 percent) and China (70 percent).
While labor force participation rates have been rising, Japan’s unemployment rate has
steadily declined, from 5.4 percent in 2000 to 3.5 percent as of April 2015. As the population
ages, Japan is nearing full employment. Although the youth unemployment rate is higher
than that of the overall working-age population, it is among the lowest in the world at
6.3 percent at the end of 2014.
Low unemployment masks the quality of many jobs, however. An increasing share are
part-time and temporary positions. Japan has attempted to give companies more flexibility
by allowing them to shift away from the lifetime employment model and begin hiring “nonregular”
(temporary) workers, or haken. By 2014, more than one-third of workers were
covered by these arrangements (Exhibit C11). Unlike regular full-time employees, these
temporary workers have limited legal protections and earn no pensions. This trend is
continuing to grow, and it has created a two-tiered workforce.
Surveys of Japanese workers suggest that many feel overqualified for their jobs. Coupled
with a highly skilled labor force, this could create a big opportunity for online talent platforms
to exert impact. According to a LinkedIn survey, 48 percent of workers feel overqualified for
their current jobs, the highest such response rate among the focus countries. Educational
attainment in Japan is very high: more than 40 percent of the labor force has a tertiary
degree (a share that rises to 58 percent among 25- to 34-year-olds). Helping skilled
workers find jobs that are a better fit can have a substantial impact on boosting productivity
But the potential benefits of online talent platforms in Japan are constrained by its rigid
labor market. As mentioned above, Japanese companies historically offered a lifetime
employment system that emphasized seniority. Today the legal strictures around lifetime
employment have mostly been lifted, making the labor market more flexible in theory. But in
practice, downsizing is viewed in a strongly negative light, making it difficult for firms to pare
back where necessary.
Workers, too, tend to be reluctant to advance their careers by moving from company
to company. Both geographic mobility and the likelihood of changing jobs have barely
shifted over the years. The share of the population that moves across prefectures and
within prefectures each year has slightly declined since 1960, and the share with less than
one year of job tenure has remained virtually constant since 2000 (Exhibit C12). However,
1.9 percent of the population moves long distances between prefectures each year, on par
with the share in Germany and slightly higher than in the United States (1.6 percent). But the
rate of job turnover is very low in Japan. Only one out of 20 Japanese workers has been in
his or her current job for a year or less, compared to one out of five Americans and one out
of eight Germans. This relative stasis limits the impact online talent platforms can create
through better matching.
Another potential barrier is the relatively slow adoption of talent platforms by the Japanese.
LinkedIn has only 1.3 million members in Japan, out of a labor force of 65 million people
(2 percent). In contrast, 35 percent of the German labor force is on either LinkedIn or Xing.8
Despite Japan’s excellent digital infrastructure, there are limiting cultural factors, including
an aversion to publicly posting personal information that could be construed as bragging or
linking to one’s boss. Career advancement is traditionally associated with rising through the
ranks within the same company, which reduces the incentives to use talent platforms.
By 2025, online talent platforms could raise Japan’s GDP by 1.5 percent
Our projections show that in a decade’s time, online talent platforms could add 1.5 percent
($77 billion) to Japan’s annual GDP and raise employment by 1.5 percent (creating
900,000 full-time-equivalent positions). In addition, they could improve work outcomes for
approximately eight million Japanese through shorter job searches, better matches, and
new flexible working options (Exhibit C13).
The largest impact comes from higher participation, which could add 0.7 percent to annual
GDP while generating 700,000 full-time-equivalent positions and benefiting three million
individuals. The impact is smaller than in other advanced economies since cultural barriers
discourage many women from working full-time, and we assume online talent platforms
do not affect these. However, they can provide new types of flexible working arrangements
that may appeal to stay-at-home parents and the recently retired; increasing the number of
hours women and seniors work could boost GDP. The second-largest impact comes from
higher productivity, which can increase GDP by 0.4 percent and connect some two million
individuals with jobs that are a better fit. Since Japan already has very low unemployment
and because few people switch jobs, the impact from accelerating job search time is limited.
But Japan does have potential for significant impact from improving the fit between workers
and jobs, which can raise labor force productivity—a particularly important benefit given
Japan’s aging workforce.
Among the seven focus economies in our analysis, we found the largest potential impact in
Brazil. A number of persistent labor market problems could be addressed by online talent
platforms, and the population is known for enthusiastically adopting social networking tools.
Brazil has a large, fluid labor force, but many people work in the informal sector
Brazil has enjoyed decades of robust population growth, although that trend is gradually
ending as the population ages. In the next decade, the working-age population is projected
to expand by 0.7 percent annually, less than half of the growth rate from 2000 to 2010. While
the working-age population has been growing, more Brazilian women have been entering
the labor force. The labor force participation rate among Brazilian men has remained high
and relatively steady at around 85 percent for years, but women’s participation rose from
47.6 percent in 1990 to 65 percent in 2013.
However, among a working-age population of 139 million, around 38 percent are inactive,
unemployed, or working part-time. This translates into some 53 million people who are
economically underutilized (Exhibit C14). The official unemployment rate remains relatively
low, particularly in light of the nation’s recent economic slowdown. It stood at about
10 percent before 2004, after which it steadily declined to 5.0 percent at the end of 2014.
The job market has tightened for various reasons, including a shift of labor from tradable
sectors to more labor-intensive, non-tradable sectors and the pressures of aging. However,
youth unemployment, which stood at 15 percent at the end of 2014, is an urgent issue.
Some 20 percent of Brazil’s young people are not in education, employment, or training.
Brazil also has a massive informal economy, which accounts for 42 percent of nonagricultural
employment and 37 percent of total GDP. Informal employment accounts for
46 percent of nonagricultural employment among women, compared with 39 percent
for men. Past MGI research estimated that the informal sector accounts for more than
40 percent of Brazil’s productivity gap with the United States.9 The ability of online talent
platforms to connect individuals with opportunities in the formal sector can make a dent in
Brazil has a fluid labor market, with a high rate of people moving between jobs, creating the
right conditions for online talent platforms to generate GDP impact (Exhibit C15). One out
of five workers have less than one year of job tenure in his or her current role, a similar share
as the United States and the second-highest across our seven focus countries. In addition,
only 15 percent of the unemployed in Brazil have been out of work for more than a year.
Moreover, Brazil is rapidly becoming a digital nation; its online population has quadrupled
over the past decade. Brazilians are avid users of online social networks. Facebook has
some 65 million users in Brazil, which is more than 30 percent of the population—an
extraordinarily high share given that just over half of the population has Internet access.
McKinsey’s iConsumer survey showed that social network use is intense across all income
segments, well ahead of use in other countries.10 LinkedIn’s membership in Brazil grew
from 325 people at the end of 2003 to 2.1 million at the end of 2014—the fastest growth rate
among our seven focus countries.
However, Brazil is facing a serious talent shortage. This requires increased investment in
education—an issue that is beyond the scope of what talent platforms can address. Only
12 percent of the population has a tertiary degree, and the average educational attainment
is 7.2 years of schooling (slightly below the comparable figure in China). Manpower’s 2014 survey found that almost two-thirds of Brazilian employers say it is hard to fill openings.
LinkedIn’s member survey found that only 27 percent of respondents in Brazil felt
overqualified for their current roles, far below the proportion in other countries.
By 2025, online talent platforms could raise Brazil’s GDP by 2.4 percent
Of the seven countries we analyzed in detail, we found the largest potential for economic
impact as measured by share of GDP in Brazil. Our projections show that by 2025,
online talent platforms could add 2.4 percent ($69 billion) to annual GDP while increasing
employment by 2.6 percent (adding 2.7 million full-time-equivalent positions). They could
improve work outcomes for some 21 million people through shorter job searches, better
matches between workers and jobs, and increasing participation (Exhibit C16).
The largest impact comes from cutting job search time to reduce unemployment. Because
of the high rate of job changes in Brazil, reducing the amount of time that people spend
between jobs can have a powerful effect. There is potential for online talent platforms to
lower the equilibrium rate of unemployment rate by 1.2 percentage points, the largest
reduction among our seven focus countries. This can increase annual GDP by 0.9 percent
while creating 1.3 million full-time-equivalent positions and benefiting 12 million Brazilians.
Boosting participation—by creating flexible opportunities for freelance work that can appeal
to women or by providing young people with the tools to find work—creates the secondlargest
impact. This could raise GDP by 0.8 percent annually and create 1.4 million full-timeequivalent
positions. Moving even a small fraction of workers from the informal economy into
formal roles can boost productivity and raise GDP by 0.7 percent annually. We estimate that
this could affect up to two million individuals in the shadow economy.
Perhaps surprisingly, China appears likely to capture the lowest economic impact from
online talent platforms as a share of GDP among our seven focus countries. However, this is
offset by the sheer number of people—some 92 million in all—who could benefit from these
tools in various ways. The relatively limited economic potential stems from China’s alreadyhigh
rate of labor force participation and low rate of unemployment, combined with low
overall wage levels. China’s laws on residency also limit the impact by reducing the ability of
individuals to move between cities in search of better employment opportunities.
China has low unemployment and high labor force participation, although its
workforce is aging
For decades, China benefited from an expansion of its labor force, but now it faces serious
demographic pressures due to aging. The nation is already feeling the effects of a shrinking
labor pool; coastal factories, for example, report difficulties finding workers. This issue
increases the importance of labor force participation to sustain economic growth. Some
27 percent of the working-age population is inactive or unemployed.11 This translates into
some 266 million people (Exhibit C17). The labor force participation rate among Chinese
men, which stood at 88.9 percent in 1990, declined to 84 percent in 2013. For women, it
declined from 84.2 percent in 1990 to 77.3 percent. Despite this erosion, both male and
female labor force participation rates are relatively high compared to rates in other countries.
But this shift is one reason that China’s GDP growth has been slowing.
China’s unemployment rate is low by international comparison and has held relatively
steady, fluctuating between 3.8 percent and 4.6 percent from 2000 to 2013. At the end
of 2014, the official unemployment rate was reported at 4.1 percent. Although youth
unemployment is higher (10 percent as of the end of 2013), it is much lower than the rate in
many other countries.12 The aging phenomenon is keeping China’s labor market tight, which
limits the ability of online talent platforms to create impact through faster job searches.
In addition, China, unlike other emerging markets, has a more modestly sized informal
economy (at about 12 percent of GDP). However, with some 37 percent of non-agricultural
employment in the shadow economy, there is potential to boost GDP by moving these
workers into more productive roles in the formal economy.
China also faces a major skills shortage. The country could confront a shortfall of 24 million
skilled workers by 2020 (eight million university graduates and 16 million with vocational
training); this could cost the economy some $250 billion (around 2.3 percent of GDP).13 The
average educational attainment is 7.5 years of schooling, and according to the OECD, only
5 percent of adults between the ages of 25 to 64 have tertiary degrees (although 18 percent
of Chinese people between the ages of 25 and 34 do). This limits the potential impact of
using talent platforms to raise productivity by making better matches.
China’s urban residents have embraced the Internet, but rural areas lag far behind in terms
of digital infrastructure. The nation’s overall Internet penetration rate remains relatively low
at 47 percent. LinkedIn has eight million members in China, while Viadeo has about five
million users after acquiring the local professional network Tianji. Upwork has about 62,000
freelancers in China. These numbers combine to represent less than 2 percent of the
country’s working-age population. However, our interviews with experts suggest that there
is growing willingness and motivation, particularly among professionals and youth, to use
online talent platforms to expand career options.
By 2025, online talent platforms could raise China’s GDP by 1.5 percent
Among our seven focus countries, China is likely to capture the lowest economic impact
relative to GDP. By 2025, we calculate that online talent platforms could raise GDP by
1.5 percent ($485 billion) annually while increasing employment by 1.7 percent (creating
12.9 million full-time-equivalent positions). They could benefit approximately 92 million
individuals in various ways (Exhibit C18).
The largest source of impact is higher participation, which could boost GDP by 0.7 percent
annually. Providing part-time or contingent work opportunities could benefit some 34 million
individuals; this becomes an increasingly important effect as the demand for work flexibility
increases in tandem with household income. The second-largest effect comes from
reducing unemployment, and this is somewhat modest since China’s unemployment rate
is already low. Additionally, China’s hukou (or household registration) system and its uneven
regional development hinder worker mobility and cause large geographic mismatches that
online platforms cannot mitigate. Nevertheless, reducing unemployment would increase
GDP by 0.5 percent while creating nearly five million full-time-equivalent positions and
helping some 40 million individuals find jobs more quickly.
The impact from increased productivity is also quite limited, at only 0.3 percent of GDP
annually, due to the population’s low educational attainment and low wages. However,
nearly 17 million individuals can become more productive by using online talent platforms
to find jobs that better fit their skills or allow them to move from the shadow economy to
the formal sector. Although a LinkedIn survey found that some 27 percent of Chinese
professionals felt overqualified for their jobs, their low wages limit the scale of impact through
In the future, China could reap more benefits from online talent platforms if the hukou
system is reformed to improve access to services for migrant workers and their families. This
would remove some of the barriers impeding geographic mobility and labor market fluidity,
allowing workers to pursue better job opportunities. China has also been investing heavily in
education, including at the university level. Today many Chinese college graduates are not
landing the jobs they expected, while employers complain that they do not have the right
skills. China could benefit from harnessing the data and insights gathered by online talent
platforms to solve this mismatch and build the skills that the economy truly needs. China
could also increase the platforms’ potential impact by continuing to build the necessary
digital infrastructure to widen access to the Internet.
India could be poised to capture relatively high GDP impact from online talent platforms.
The country has low labor force participation, high unemployment, and a large informal
economy—all factors that talent platforms can help to address. However, low Internet
penetration and cultural barriers that discourage women from working constrain this impact
to some degree.
India has a massive and growing labor force, but low participation among
women and a large informal economy
India’s labor force has been rapidly expanding for the past five decades, and it will continue
to outpace growth in most other countries in the decades ahead. With 30 percent of its
vast working-age population under the age of 24, India could reap a major demographic
dividend. By 2030, it will have the largest working-age population in the world at one
But while the population has been growing, India’s abundant human capital remains
seriously underutilized. Some 46 percent of the working-age population is inactive or
unemployed, the highest such share across our seven focus countries.14 This translates into
some 380 million people (Exhibit C19). Labor force participation among working-age men
declined from 87.1 percent in 1990 to 82.5 percent in 2013. The participation rate for women
is among the lowest in the world, and it slid from 36.9 percent in 1990 to 28.5 percent in
2013. Overall participation dropped by 7 percent over this period, while the gender gap
stretched to 54 percent. This represents a major drag on the economy—but also a large
opportunity for growth if India can find a way to mobilize more of its human capital. However,
this will depend on making a major cultural shift, which is beyond the scope of this research.
India’s unemployment rate has remained stable at around 4.5 percent since 2000.
The labor-intensive agriculture sector still employs nearly half of all workers. Youth
unemployment has been fluctuating between 9 and 11 percent, a relatively low level in
international terms but one that masks the number of Indian youth who have dropped
out of the labor force altogether. More than 25 percent of India’s young people are not in
education, employment, or training. Many have had little opportunity to attend school and
acquire the skills necessary to find formal jobs. According to a McKinsey survey, 53 percent
of Indian employers said that a lack of skills is a common reason for entry-level vacancies.
India also has an enormous informal economy, which accounts for 84 percent of nonagricultural
employment and 21 percent of total GDP (Exhibit C20). A web of restrictive labor
market regulations is a major factor behind this degree of informality, creating incentives for
many businesses to stay in the shadow economy and creating disincentives for companies
to hire.16 Since there is a substantial productivity gap between the informal and formal
sectors, this issue erodes India’s ability to raise living standards for the country as a whole.
India also has a less skilled workforce than our other focus countries. Only 8 percent of the
population has a tertiary degree, for example, and only 42 percent completed secondary
school. The average educational attainment is 4.4 years of schooling (compared with
7.5 years in China). While significant strides have been made in expanding primary education
over the past decade, nearly 50 percent of adults from ages 25 to 54—or some 200 million
people—have had no education at all. India has been expanding vocational education,
and some 44 million workers have received formal or informal training. Yet this is only
9 percent of the labor force.17 Almost two-thirds of Indian employers in Manpower’s annual
survey reported difficulties in hiring the right talent. This calls for increased and sustained
investment in education, but the issue is beyond the scope of our research.
Access to the Internet is limited to only 15 percent of the population. Despite this, online
talent platforms are growing rapidly in India. LinkedIn has more than 30 million users, the
second-largest membership population in absolute numbers outside the United States. On
the platform Upwork, Indian freelancers account for more income than those in any other
country. Still, India must expand access to the Internet if it is to capture the full potential of
online talent platforms.
By 2025, online talent platforms could raise India’s GDP by 1.9 percent
Online talent platforms could have a relatively high impact in India by 2025, adding
1.9 percent ($222 billion) to annual GDP and boosting employment by 2.2 percent (creating
11.3 million full-time-equivalent positions). Nearly 77 million individuals could benefit in
various ways, including shorter job searches, wider job options that result in better matches,
and new ways to obtain contingent work (Exhibit C21).
The largest impact in India stems from higher participation, which could add 1.2 percent
to GDP. Online platforms can create huge opportunities to connect women to flexible
arrangements and remote work opportunities from around the globe. This could generate
10 million full-time-equivalent positions and benefit 42 million individuals by 2025. Higher
productivity generates the second-largest impact, at 0.5 percent of GDP, mainly by reducing
the extent of the informal sector but also by helping people find jobs that better suit their
skills. This could add 0.3 percent, or $33 billion, to annual GDP while making 22 million
individuals more productive. Because India has a low rate of formal unemployment, the
impact of faster matches is very limited, at 0.2 percent of GDP; this is the lowest such impact
among our seven focus countries. Yet reducing job search times can still have the effect of
creating 1.4 million full-time-equivalent positions and helping 13 million unemployed people
find jobs faster.
This is a conservative estimate, however. India could benefit in a more significant way from
online talent platforms if it continues to widen access to the Internet and makes progress in
boosting educational attainment.