Nikolett HŐS: Algorithmic Wage-Setting in the Gig Economy: Transparency, Fairness, and the Limits of Algorithmic Accountability. Nr. 2025/17.

Algorithmic wage-setting - the use of data-driven, automated systems to determine pay - has become one of the defining and most controversial features of the platform economy in recent years. This paper examines how algorithmic pricing mechanisms, originally designed as a neutral market instrument to optimize market efficiency, are transforming the structure of income, fairness, and accountability in digitally mediated labour markets. It argues that while algorithmic price and pay determination offers efficiency and flexibility for platforms and, at times, convenience for workers, it also raises complex legal and ethical questions about transparency, autonomy, and distributive justice. The paper takes a deliberately balanced approach, instead of framing platform workers as passive victims of automation, it situates algorithmic pay-setting within the broader interplay of innovation, regulatory design, and labour governance. The paper cautions against equating all algorithmic wage-setting with exploitation, noting that price differentiation is a long-recognized economic practice that becomes problematic only when it relies on opaque or discriminatory data inputs. Yet, the paper also notes that transparency, disclosure obligations must be balanced against operational feasibility and market dynamics. In its second part, the paper explores how existing and emerging regulatory frameworks respond to the challenges of this form of algorithmic management. In the European Union, the General Data Protection Regulation (GDPR), the Platform Work Directive (2024/2831), and the Artificial Intelligence Act (2024/1689) collectively establish a new regime of digital transparency and human oversight over automated decision-making. In particular, the article examines how these legal instruments codify and extend above all the right to explanation to platform workers, requiring platforms to provide meaningful information on how algorithms determine pay and ultimately force us to rethink the human factor in employment related decision-making.

The working paper is available for download here.