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Measuring Temporary Labor Outsourcing in U.S. Manufacturing

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  • Marcello Estevao
  • Saul Lach

Abstract

Several analysts claim that firms have been using more flexible work arrangements in order to contain the costly adjustment of labor to changes in economic conditions. In particular, temporary help supply (THS) employment has increased dramatically in the last ten years. However, there is only scant evidence on the industries that are hiring this type of worker. In particular, some anecdotal evidence points to the fact that manufacturing industries have substantially stepped up their demand for THS workers since the mid-1980s. If this is true, not accounting for this flow of workers from the service sector to manufacturing may lead to misleading conclusions about the cyclical and long-term path of manufacturing employment and hours of work. We close this gap by providing several estimates of the number of individuals employed by temporary help supply (THS) firms who worked in the manufacturing sector from 1972 to 1997. One estimate, in particular, is based on a new methodology that uses minimal assumptions to put bounds on the probability that a manufacturing worker is employed by a THS firm. The bounds rely on readily available data on workers' individual characteristics observable in the CPS. We show that manufacturers have been using THS workers more intensively in the 1990s. In addition, the apparent flatness of manufacturing employment in the 1990s can be explained in part by this type of outsourcing from the service sector. Finally, not accounting for THS hours overstated the increase in average annual manufacturing labor productivity by « percentage point during the 1991-1997 period.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7421.

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Date of creation: Nov 1999
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Handle: RePEc:nbr:nberwo:7421

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  1. Katharine G. Abraham & Susan K. Taylor, 1993. "Firms' Use of Outside Contractors: Theory and Evidence," NBER Working Papers 4468, National Bureau of Economic Research, Inc.
  2. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1409-1448, November.
  3. Manski, C.F., 1992. "Identification Problems in the Social Sciences," Working papers 9217, Wisconsin Madison - Social Systems.
  4. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-61, May.
  5. Lewis M. Segal & Daniel G. Sullivan, 1995. "The temporary labor force," Economic Perspectives, Federal Reserve Bank of Chicago, issue Mar, pages 2-19.
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Cited by:
  1. Marloes de Graaf-Zijl & Gerard van den Berg & Arjan Heyma, 2011. "Stepping stones for the unemployed: the effect of temporary jobs on the duration until (regular) work," Journal of Population Economics, Springer, vol. 24(1), pages 107-139, January.
  2. Matthew Dey & Susan Houseman & Anne Polivka, 2006. "Manufacturers' Outsourcing to Employment Services," Upjohn Working Papers and Journal Articles 07-132, W.E. Upjohn Institute for Employment Research.
  3. Marcello Estevao & Saul Lach, 1999. "The evolution of the demand for temporary help supply employment in the United States," Finance and Economics Discussion Series 1999-58, Board of Governors of the Federal Reserve System (U.S.).
  4. Maria W. Otoo, 1999. "Temporary employment and the natural rate of unemployment," Finance and Economics Discussion Series 1999-66, Board of Governors of the Federal Reserve System (U.S.).
  5. repec:iab:iabzaf:v:41:i:2/3:p:95-116 is not listed on IDEAS
  6. Bartel, Ann P & Lach, Saul & Sicherman, Nachum, 2005. "Outsourcing and Technological Change," CEPR Discussion Papers 5082, C.E.P.R. Discussion Papers.
  7. Randall W. Eberts, . "After the Doors Close: Assisting Laid-Off Workers to Find Jobs," Upjohn Working Papers and Journal Articles rwe2005, W.E. Upjohn Institute for Employment Research.
  8. Yukako Ono & Daniel Sullivan, 2008. "Manufacturing Plants' Use of Temporary Workers: An Analysis Using Census Micro Data," Working Papers 08-40, Center for Economic Studies, U.S. Census Bureau.
  9. Fitzenberger, Bernd & Hübler, Olaf & Kraft, Kornelius, 2008. "Flexibilisierungspotenziale bei heterogenen Arbeitsmärkten : eine Einführung (Potentials for increasing flexibility in heterogeneous labour markets : an introduction)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 95-116.
  10. Matthew Dey & Susan Houseman & Anne Polivka, 2009. "What Do We Know about Contracting Out in the United States? Evidence from Household and Establishment Surveys," Upjohn Working Papers and Journal Articles 09-157, W.E. Upjohn Institute for Employment Research.
  11. Britton Lombardi & Yukako Ono, 2008. "Professional employer organizations: What are they, who uses them, and why should we care?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 2-14.
  12. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," JCPR Working Papers 153, Northwestern University/University of Chicago Joint Center for Poverty Research.
  13. Yukako Ono & Alexei Zelenev, 2003. "Temporary help services and the volatility of industry output," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 15-28.
  14. Randall W. Eberts, 2005. "After the doors close: assisting laid-off workers to find jobs," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 75-85.

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