IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/14517.html
   My bibliography  Save this paper

Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data

Author

Listed:
  • Schoefer, Benjamin
  • Drenik, Andres
  • Jäger, Simon
  • Plotkin, Pascuel

Abstract

We estimate how much firms differentiate pay premia between regular and outsourced workers. We study temp agency work arrangements where pay setting has previously escaped measurement because existing datasets do not report links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We overcome this measurement challenge by leveraging unique administrative data from Argentina with such links. We estimate that temp agency workers receive 49% of the workplace-specific pay premia earned by regular workers in user firms: the midpoint between the benchmark for insiders (one) and the competitive spot-labor market benchmark (zero).

Suggested Citation

  • Schoefer, Benjamin & Drenik, Andres & Jäger, Simon & Plotkin, Pascuel, 2020. "Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data," CEPR Discussion Papers 14517, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14517
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP14517
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    2. Emily Breza & Supreet Kaur & Yogita Shamdasani, 2018. "The Morale Effects of Pay Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 611-663.
    3. Emmanuel Saez & Benjamin Schoefer & David Seim, 2019. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," American Economic Review, American Economic Association, vol. 109(5), pages 1717-1763, May.
    4. David H. Autor & Susan N. Houseman, 2010. "Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from "Work First"," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 96-128, July.
    5. David Card & Alexandre Mas & Enrico Moretti & Emmanuel Saez, 2012. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," American Economic Review, American Economic Association, vol. 102(6), pages 2981-3003, October.
    6. Deborah Goldschmidt & Johannes F. Schmieder, 2017. "The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1165-1217.
    7. Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2003. "The Role of Temporary Agency Employment in Tight Labor Markets," ILR Review, Cornell University, ILR School, vol. 57(1), pages 105-127, October.
    8. David H. Autor & Susan N. Houseman & Sari Pekkala Kerr, 2017. "The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 149-190.
    9. Arindrajit Dube & Laura Giuliano & Jonathan Leonard, 2019. "Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior," American Economic Review, American Economic Association, vol. 109(2), pages 620-663, February.
    10. Patrick Kline & Raffaele Saggio & Mikkel Sølvsten, 2020. "Leave‐Out Estimation of Variance Components," Econometrica, Econometric Society, vol. 88(5), pages 1859-1898, September.
    11. Arindrajit Dube & Ethan Kaplan, 2010. "Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards," ILR Review, Cornell University, ILR School, vol. 63(2), pages 287-306, January.
    12. David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 633-686.
    13. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
    14. Gerard, François & Lagos, Lorenzo & Severnini, Edson & Card, David, 2018. "Assortative Matching or Exclusionary Hiring? The Impact of Firm Policies on Racial Wage Differences in Brazil," CEPR Discussion Papers 13273, C.E.P.R. Discussion Papers.
    15. Katharine G. Abraham & John C. Haltiwanger & Kristin Sandusky & James R. Spletzer, 2017. "Measuring the Gig Economy: Current Knowledge and Open Issues," NBER Chapters, in: Measuring and Accounting for Innovation in the Twenty-First Century, pages 257-298, National Bureau of Economic Research, Inc.
    16. Diego Daruich & Sabrina Di Addario & Raffaele Saggio, 2023. "The Effects of Partial Employment Protection Reforms: Evidence from Italy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(6), pages 2880-2942.
    17. M. J. Andrews & L. Gill & T. Schank & R. Upward, 2008. "High wage workers and low wage firms: negative assortative matching or limited mobility bias?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(3), pages 673-697, June.
    18. Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2001. "The Role of Temporary Help Employment in Tight Labor Markets," Upjohn Working Papers 01-73, W.E. Upjohn Institute for Employment Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonin Bergeaud & Clément Malgouyres & Clément Mazet-Sonilhac & Sara Signorelli, 2021. "Technological Change and Domestic Outsourcing," Working Papers halshs-03265792, HAL.
    2. Bas Scheer & Wiljan van den Berge & Maarten Goos & Alan Manning & Anna Salomons, 2022. "Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling," CPB Discussion Paper 435, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Pisch, Frank & Berlingieri, Giuseppe, 2022. "Managing Export Complexity: The Role of Service Outsourcing," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 135680, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    4. Simonsen, Marianne & Skipper, Lars & Skipper, Niels & Thingholm, Peter Rønø, 2021. "Discontinuity in care: Practice closures among primary care providers and patient health care utilization," Journal of Health Economics, Elsevier, vol. 80(C).
    5. Koning, Pierre & Muller, Paul & Prudon, Roger, 2022. "Why Do Temporary Workers Have Higher Disability Insurance Risks Than Permanent Workers?," IZA Discussion Papers 15173, Institute of Labor Economics (IZA).
    6. Benjamin Schoefer & Oren Ziv, 2021. "Productivity, Place, and Plants," CESifo Working Paper Series 8843, CESifo.
    7. Mark Kattenberg & Bas Scheer & Jurre Thiel, 2023. "Causal forests with fixed effects for treatment effect heterogeneity in difference-in-differences," CPB Discussion Paper 452, CPB Netherlands Bureau for Economic Policy Analysis.
    8. FUKAI Taiyo & KAWAGUCHI Daiji & KONDO Ayako & YOKOYAMA Izumi, 2023. "How Do Firms Attain Internal and External Flexibility of Employment?," Discussion papers 23089, Research Institute of Economy, Trade and Industry (RIETI).
    9. Diego Daruich & Sabrina Di Addario & Raffaele Saggio, 2023. "The Effects of Partial Employment Protection Reforms: Evidence from Italy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(6), pages 2880-2942.
    10. Carreño, José Gabo & Uras, Burak, 2024. "Macro welfare effects of flexible labor contracts," European Economic Review, Elsevier, vol. 161(C).
    11. Adrien Bilal & Hugo Lhuillier, 2021. "Outsourcing, Inequality and Aggregate Output," Working Papers 2021-05, Becker Friedman Institute for Research In Economics.
    12. Amior, Michael & Stuhler, Jan, 2023. "Immigration, Monopsony and the Distribution of Firm Pay," IZA Discussion Papers 16692, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. ASAI Yukiko & Dmitri K. KOUSTAS, 2021. "Temporary Work Contracts and Female Labor Market Outcomes," Discussion papers 21071, Research Institute of Economy, Trade and Industry (RIETI).
    2. Jonas Hjort & Xuan Li & Heather Sarsons, 2020. "Across-Country Wage Compression in Multinationals," NBER Working Papers 26788, National Bureau of Economic Research, Inc.
    3. Jonas Hjort & Xuan Li & Heather Sarsons, 2020. "Random-Coefficients Logit Demand Estimation with Zero-Valued Market Shares," Working Papers 2020-15, Becker Friedman Institute for Research In Economics.
    4. Jae Song & David J Price & Fatih Guvenen & Nicholas Bloom & Till von Wachter, 2019. "Firming Up Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 1-50.
    5. Di Addario, Sabrina & Kline, Patrick & Saggio, Raffaele & Sølvsten, Mikkel, 2023. "It ain’t where you’re from, it’s where you’re at: Hiring origins, firm heterogeneity, and wages," Journal of Econometrics, Elsevier, vol. 233(2), pages 340-374.
    6. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    7. Sabrina Di Addario & Patrick Kline & Raffaele Saggio & Mikkel Soelvsten, 2022. "It ain't where you're from it's where you're at: firm effects, state dependence, and the gender wage gap," Temi di discussione (Economic working papers) 1374, Bank of Italy, Economic Research and International Relations Area.
    8. Bas Scheer & Wiljan van den Berge & Maarten Goos & Alan Manning & Anna Salomons, 2022. "Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling," CPB Discussion Paper 435, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    10. Dostie, Benoit & Li, Jiang & Card, David & Parent, Daniel, 2023. "Employer policies and the immigrant–native earnings gap," Journal of Econometrics, Elsevier, vol. 233(2), pages 544-567.
    11. Giupponi, Giulia & Machin, Stephen, 2022. "Company wage policy in a low-wage labor market," LSE Research Online Documents on Economics 117983, London School of Economics and Political Science, LSE Library.
    12. Lachowska, Marta & Mas, Alexandre & Saggio, Raffaele & Woodbury, Stephen A., 2023. "Do firm effects drift? Evidence from Washington administrative data," Journal of Econometrics, Elsevier, vol. 233(2), pages 375-395.
    13. Arellano-Bover, Jaime & San, Shmuel, 2023. "The Role of Firms and Job Mobility in the Assimilation of Immigrants: Former Soviet Union Jews in Israel 1990–2019," IZA Discussion Papers 16389, Institute of Labor Economics (IZA).
    14. Stéphane Bonhomme & Kerstin Holzheu & Thibaut Lamadon & Elena Manresa & Magne Mogstad & Bradley Setzler, 2023. "How Much Should We Trust Estimates of Firm Effects and Worker Sorting?," Journal of Labor Economics, University of Chicago Press, vol. 41(2), pages 291-322.
    15. Arellano-Bover, Jaime & Saltiel, Fernando, 2021. "Differences in On-the-Job Learning across Firms," IZA Discussion Papers 14473, Institute of Labor Economics (IZA).
    16. Bassier, Ihsaan, 2022. "Firms and inequality when unemployment is high," LSE Research Online Documents on Economics 117999, London School of Economics and Political Science, LSE Library.
    17. Alejandro Micco & Pablo Muñoz-Henríquez, 2018. "The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers," Working Papers wp463, University of Chile, Department of Economics.
    18. Asai, Yukiko & Koustas, Dmitri K., 2023. "Temporary work contracts and female labor market outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 1-20.
    19. Ihsaan Bassier, 2022. "Firms and inequality when unemployment is high," CEP Discussion Papers dp1872, Centre for Economic Performance, LSE.
    20. Bassier, Ihsaan, 2023. "Firms and inequality when unemployment is high," Journal of Development Economics, Elsevier, vol. 161(C).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:14517. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.