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Temporary Help Agencies and the Advancement Prospects of Low Earners

In: Studies of Labor Market Intermediation

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  • Fredrik Andersson
  • Harry J. Holzer
  • Julia Lane

Abstract

In this paper we use a very large matched database on firms and employees to analyze the use of temporary agencies by low earners, and to estimate the impact of temp employment on subsequent employment outcomes for these workers. Our results show that, while temp workers have lower earnings than others while working at these agencies, their subsequent earnings are often higher – but only if they manage to gain stable work with other employers. Furthermore, the positive effects seem mostly to occur because those working for temp agencies subsequently gain access to higher-wage firms than do comparable low earners who do not work for temps. The positive effects we find seem to persist for up to six years beyond the period during which the temp employment occurred.

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This chapter was published in:

  • David H. Autor, 2009. "Studies of Labor Market Intermediation," NBER Books, National Bureau of Economic Research, Inc, number auto07-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 3595.

    Handle: RePEc:nbr:nberch:3595

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    References

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    1. John M. Abowd & John C. Haltiwanger & Julia I. Lane, 2004. "Integrated Longitudinal Employee-Employer Data for the United States," Longitudinal Employer-Household Dynamics Technical Papers, Center for Economic Studies, U.S. Census Bureau 2004-02, Center for Economic Studies, U.S. Census Bureau.
    2. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 9503, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    3. Rebitzer, James B, 1993. "Radical Political Economy and the Economics of Labor Markets," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1394-434, September.
    4. David H. Autor & Susan Houseman, 2005. "Do Temporary Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from 'Work First'," NBER Working Papers 11743, National Bureau of Economic Research, Inc.
    5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
    6. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(4), pages 1409-1448, November.
    7. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc.
    8. Harry J. Holzer & Robert J. LaLonde, 1999. "Job Change and Job Stability Among Less-Skilled Young Workers," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 80, Northwestern University/University of Chicago Joint Center for Poverty Research.
    9. Holzer, Harry J, 1987. "Informal Job Search and Black Youth Unemployment," American Economic Review, American Economic Association, American Economic Association, vol. 77(3), pages 446-52, June.
    10. Ichino, Andrea & Mealli, Fabrizia & Nannicini, Tommaso, 2006. "From Temporary Help Jobs to Permanent Employment: What Can We Learn from Matching Estimators and their Sensitivity?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5736, C.E.P.R. Discussion Papers.
    11. David Autor & Susan Houseman, 2005. "Temporary Agency Employment as a Way out of Poverty?," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 05-123, W.E. Upjohn Institute for Employment Research.
    12. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers, Center for Economic Studies, U.S. Census Bureau 2002-06, Center for Economic Studies, U.S. Census Bureau.
    13. Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
    14. Julia Lane & Kelly S. Mikelson & Pat Sharkey & Doug Wissoker, 2003. "Pathways to work for low-income workers: The effect of work in the temporary help industry," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 581-598.
    15. Harry J. Holzer & Steven Raphael & Michael A. Stoll, 2006. "Employers in the Boom: How Did the Hiring of Less-Skilled Workers Change during the 1990s?," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 283-299, May.
    16. Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier.
    17. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
    18. Daniel Immergluck, 1996. "What employers want: Job prospects for less-educated workers," The Review of Black Political Economy, Springer, Springer, vol. 24(4), pages 135-143, June.
    19. Abowd, John M. & Vilhuber, Lars, 2005. "The Sensitivity of Economic Statistics to Coding Errors in Personal Identifiers," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 23, pages 133-152, April.
    20. Charles L. Schultze, 2003. "The Consumer Price Index: Conceptual Issues and Practical Suggestions," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 17(1), pages 3-22, Winter.
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    Cited by:
    1. Carolyn J. Heinrich & Peter R. Mueser & Kenneth R. Troske, 2007. "The Role of Temporary Help Employment in Low-wage Worker Advancement," NBER Working Papers 13520, National Bureau of Economic Research, Inc.
    2. Jahn, Elke J. & Rosholm, Michael, 2010. "Looking beyond the bridge: How temporary agency employment affects labor market outcomes," IAB Discussion Paper 201009, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Okudaira, Hiroko & Ohtake, Fumio & Kume, Koichi & Tsuru, Kotaro, 2013. "What does a temporary help service job offer? Empirical suggestions from a Japanese survey," Journal of the Japanese and International Economies, Elsevier, vol. 28(C), pages 37-68.
    4. Bart COCKX & Matteo PICCHIO, 2009. "Are Short-Lived Jobs Stepping Stones to Long-Lasting Jobs ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Jahn, Elke J. & Pozzoli, Dario, 2011. "Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers?," IZA Discussion Papers 5837, Institute for the Study of Labor (IZA).
    6. Elke J. Jahn, 2010. "Reassessing the Pay Gap for Temps in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 230(2), pages 208-233.
    7. Jahn, Elke J., 2008. "Reassessing the Wage Penalty for Temps in Germany," IZA Discussion Papers 3663, Institute for the Study of Labor (IZA).
    8. Andersson Joona, Pernilla & Wadensjö, Eskil, 2012. "A Price for Flexibility? The Temp Agency Wage Gap in Sweden 1998-2008," IZA Discussion Papers 6587, Institute for the Study of Labor (IZA).
    9. Jahn, Elke J. & Rosholm, Michael, 2014. "Looking beyond the bridge: The effect of temporary agency employment on labor market outcomes," European Economic Review, Elsevier, Elsevier, vol. 65(C), pages 108-125.

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