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Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers?

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Author Info

  • Jahn, Elke J.

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Pozzoli, Dario

    ()
    (KORA - Danish Institute for Local and Regional Government Research)

Abstract

It is a well-known fact that temporary agency workers have to accept high pay penalties. However, remarkably little is known about the remuneration of workers who are frequently employed in this sector or who are employed for a substantial length of time. Based on a rich administrative data set, we estimate the effects of the intensity of agency employment on the temp wage gap and post-temp earnings in Germany. Using a two-stage selection-corrected method in a panel data framework, we show that the wage gap for temps with low treatment intensity is high but decreases with exposure to the sector. It seems that temps are able to accumulate human capital while being employed in this sector. Temps who move to permanent jobs have to accept a sizeable wage disadvantage at first, indicating that temporary agency employment might stigmatise workers. However, agency employment does not seem to leave a long-lasting scar.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5837.

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Length: 39 pages
Date of creation: Jul 2011
Date of revision:
Publication status: published in: Labour Economics, 2013, 24, 48-57
Handle: RePEc:iza:izadps:dp5837

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Keywords: dose response function approach; treatment intensity; temporary agency employment; wages; Germany;

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References

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  1. Michael Kvasnicka, 2005. "Does Temporary Agency Work Provide a Stepping Stone to Regular Employment?," Labor and Demography 0510005, EconWPA.
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Cited by:
  1. 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).
  2. Niebuhr, Annekatrin & Buch, Tanja, 2013. "Wage effects of labor market entry via temporary work agency employment - evidence for German apprenticeship graduates," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79818, Verein für Socialpolitik / German Economic Association.

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