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What Drives the Demand for Temporary Agency Workers?

Author

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  • Elke J. Jahn
  • Jan Bentzen

Abstract

Temporary agency employment has grown steadily in most European countries over the past three decades as part of the general trend towards increased employment flexibility. Yet to this day, it remains an open question what drives the demand for temporary agency workers. The paper examines, first, whether the deregulation of temporary agency employment is responsible for the growth of the flexible staffing industry. Second, we investigate the cyclical behavior of temporary agency employment. Using monthly data for Germany covering the period 1973-2008, we show that the continuous liberalization of this sector is not responsible for the surge in temporary agency employment. Our analysis reveals, moreover, that temporary agency employment exhibits strong cyclical behavior and correlates with main economic indicators in real time. Since most European countries promoted the use of temporary agency employment in a similar way, we believe that our results may be interesting from an international perspective as well.
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Suggested Citation

  • Elke J. Jahn & Jan Bentzen, 2012. "What Drives the Demand for Temporary Agency Workers?," LABOUR, CEIS, vol. 26(3), pages 341-355, September.
  • Handle: RePEc:bla:labour:v:26:y:2012:i:3:p:341-355
    DOI: j.1467-9914.2012.00550.x
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    File URL: http://hdl.handle.net/10.1111/j.1467-9914.2012.00550.x
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    References listed on IDEAS

    as
    1. Michael C. Burda & Michael Kvasnicka, 2006. "Zeitarbeit in Deutschland: Trends und Perspektiven," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(2), pages 195-225, May.
    2. Boockmann, Bernhard & Hagen, Tobias, 2001. "The use of flexible working contracts in West Germany: evidence from an establishment panel," ZEW Discussion Papers 01-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Antoni, Manfred & Jahn, Elke J., 2006. "Do Changes in Regulation Affect Employment Duration in Temporary Work Agencies?," IZA Discussion Papers 2343, Institute for the Study of Labor (IZA).
    4. Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2001. "The Role of Temporary Help Employment in Tight Labor Markets," Upjohn Working Papers and Journal Articles 01-73, W.E. Upjohn Institute for Employment Research.
    5. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    6. Michael Neugart & Donald Storrie, 2006. "The emergence of temporary work agencies," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 137-156, January.
    7. Jahn, Elke J., 2008. "Reassessing the Wage Penalty for Temps in Germany," IZA Discussion Papers 3663, Institute for the Study of Labor (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Larisa Smirnykh & Andreas Wörgötter, 2013. "Why do Russian Firms Use Fixed-Term and Agency Work Contracts?," OECD Economics Department Working Papers 1014, OECD Publishing.
    2. Smirnych, L. I. & Wörgötter, Andreas, 2016. "The importance of institutional and organizational characteristics for the use of fixed-term and agency work contracts in Russia," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 09/2016, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    3. Jahn, Elke J. & Pozzoli, Dario, 2013. "The pay gap of temporary agency workers — Does the temp sector experience pay off?," Labour Economics, Elsevier, vol. 24(C), pages 48-57.
    4. Gunther Tichy, 2014. "Flexicurity – A Concept Doomed to Failure," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(8), pages 537-553, August.
    5. Jahn, Elke Jutta & Rosholm, Michael, 2015. "The Cyclicality of the Stepping Stone Effect of Temporary Agency Employment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113117, Verein für Socialpolitik / German Economic Association.
    6. Ferreira Sequeda M.T. & Grip A. de & Velden R.K.W. van der, 2015. "Does on-the-job informal learning in OECD countries differ by contract duration?," ROA Research Memorandum 008, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    7. Jennifer Ferreira, 2016. "The German temporary staffing industry: growth, development, scandal and resistance," Industrial Relations Journal, Wiley Blackwell, vol. 47(2), pages 117-143, March.
    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. Busk, Henna & Jahn, Elke J. & Dauth, Christine, 2015. "Do Changes in Regulation Affect Temporary Agency Workers' Job Satisfaction?," IZA Discussion Papers 8803, Institute for the Study of Labor (IZA).
    10. Jahn, Elke J. & Rosholm, Michael, 2018. "The Cyclicality of the Stepping-Stone Effect of Temporary Agency Employment," IZA Discussion Papers 11377, Institute for the Study of Labor (IZA).
    11. repec:bla:indres:v:56:y:2017:i:3:p:514-544 is not listed on IDEAS
    12. Neumann, Uwe, 2017. "Temporary agency employment in Germany: A strategic "buffer" for firms and regions in the crisis?," Ruhr Economic Papers 727, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    13. Chen, Kuan-Jen & Lai, Ching-Chong & Lai, Ting-Wei, 2016. "The Division of Temporary and Permanent Employment and Business Cycle Fluctuations," MPRA Paper 72078, University Library of Munich, Germany.
    14. Ferreira Sequeda, Maria & de Grip, Andries & Van der Velden, Rolf, 2015. "Does Informal Learning at Work Differ between Temporary and Permanent Workers? Evidence from 20 OECD Countries," IZA Discussion Papers 9322, Institute for the Study of Labor (IZA).
    15. Baudy, Philipp & Cords, Dario, 2016. "Deregulation of temporary agency employment in a unionized economy: Does this really lead to a substitution of regular employment?," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2016, University of Hohenheim, Faculty of Business, Economics and Social Sciences.

    More about this item

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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