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Looking Beyond the Bridge: How Temporary Agency Employment Affects Labor Market Outcomes

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  • Jahn, Elke J.

    () (Department of Economics, Aarhus School of Business)

  • Rosholm, Michael

    () (Department of Economics, Aarhus School of Business)

Abstract

We perform a comprehensive analysis of the stepping-stone effect of temporary agency employment on unemployed workers. Using the timing-of-events approach, we not only investigate whether agency employment is a bridge into regular employment but also analyze its effect on post-unemployment wages and job stability for unemployed Danish workers. We find evidence of large positive treatment effects, particularly for immigrants. There is also some indication that higher treatment intensity increases the likelihood of leaving unemployment for regular jobs. Our results show that agency employment is even more effective in tight labor markets, where firms use agency employment primarily to screen potential candidates for permanent posts. Finally, our results suggest that agency employment may improve subsequent match quality in terms of wages and job duration.

Suggested Citation

  • Jahn, Elke J. & Rosholm, Michael, 2010. "Looking Beyond the Bridge: How Temporary Agency Employment Affects Labor Market Outcomes," Working Papers 10-6, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2010_006
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    References listed on IDEAS

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    Cited by:

    1. Friso Schlitte, 2012. "Local human capital, segregation by skill, and skill‐specific employment growth," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 85-106, March.
    2. Kyyrä, Tomi & Parrotta, Pierpaolo & Rosholm, Michael, 2013. "The effect of receiving supplementary UI benefits on unemployment duration," Labour Economics, Elsevier, vol. 21(C), pages 122-133.
    3. 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).
    4. Rheinisch-Westfälisches Institut für Wirtschaftsforschung & Bertelsmann-Stiftung (ed.), 2012. "Durchlässiger Arbeitsmarkt durch Zeitarbeit? Studie im Auftrag der Bertelsmann Stiftung," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 72595, July.
    5. 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.
    6. Jahn, Elke & Rosholm, Michael, 2013. "Is temporary agency employment a stepping stone for immigrants?," Economics Letters, Elsevier, vol. 118(1), pages 225-228.
    7. Decreuse, Bruno & van Ypersele, Tanguy, 2011. "Housing market regulation and the social demand for job protection," Journal of Public Economics, Elsevier, vol. 95(11), pages 1397-1409.
    8. Eichhorst, Werner & Kendzia, Michael J. & al., et, 2013. "The Role and Activities of Employment Agencies," IZA Research Reports 57, Institute for the Study of Labor (IZA).
    9. Beckmann, Michael & Kuhn, Dieter, 2012. "Flexibility vs. screening : the performance effects of temporary agency work strategies," Working papers 2012/03, Faculty of Business and Economics - University of Basel.
    10. John T. Addison & Chad D. Cotti & Christopher J. Surfield, 2015. "Atypical Jobs: Stepping Stones or Dead Ends? Evidence from the NLSY79," Manchester School, University of Manchester, vol. 83(1), pages 17-55, January.
    11. Raattamaa, Tomas, 2016. "Essays on Delegated Search and Temporary Work Agencies," Umeå Economic Studies 935, Umeå University, Department of Economics.
    12. Dürnberger, Andrea & Drasch, Katrin & Matthes, Britta, 2010. "Kontextgestützte Abfrage in Retrospektiverhebungen: Ein kognitiver Pretest zu Erinnerungsprozessen bei Weiterbildungsereignissen," IAB Discussion Paper 201020, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. 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).
    14. Achatz, Juliane & Trappmann, Mark, 2011. "Arbeitsmarktvermittelte Abgänge aus der Grundsicherung : der Einfluss von personen- und haushaltsgebundenen Barrieren," IAB Discussion Paper 201102, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Michael Schlese, 2012. "Wie viele Leiharbeitskräfte gibt es?: Zur Vergleichbarkeit der Fallzahlen bei Leiharbeit zwischen SOEP und ANÜSTAT," SOEPpapers on Multidisciplinary Panel Data Research 486, DIW Berlin, The German Socio-Economic Panel (SOEP).
    16. 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.
    17. Susan N. Houseman, 2014. "Temporary agency work," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-27, May.

    More about this item

    Keywords

    temporary agency employment; stepping stone; employment stability; wages;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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