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Temporary Agency Work in Portugal, 1995–2000

Author

Listed:
  • Böheim, René

    (University of Linz)

  • Cardoso, Ana Rute

    (Universidade de Lisboa)

Abstract

There is widespread belief that workers in temporary agency work (TAW) are subject to poorer working conditions, in particular pay, than comparable workers in the rest of the economy. The first aim of this analysis is to quantify the wage penalty, if any, for workers in TAW. Secondly, we analyze the wage profile of workers before and after spells of TAW. Linked employer-employee data for Portugal enable us to account for observable as well as unobservable worker quality. Our results show that workers in TAW earn lower wages than their peers and that this difference is mostly due to the workers' characteristics. We estimate that workers in TAW earn on average 9% less than comparable workers in the rest of the economy if we control for the workers' observable attributes only; this difference is reduced to 1% when we control for unobservable characteristics as well. However, interesting differences emerge across groups. Younger workers, both men and women, earn higher wages in TAW than their peers in other firms, as opposed to prime-age and older workers. Moreover, for young workers TAW is not associated with a stigma effect that slows wage progression after working for TAW, contrary to prime-age and older workers, in particular males. The wage trends are also different before entering TAW. Prime-age and older workers see their wages deteriorate relative to their peers before entering TAW, suggesting that adverse labor market conditions may motivate them to search for a TAW job. We do not detect any pre-TAW wage trend for young workers.

Suggested Citation

  • Böheim, René & Cardoso, Ana Rute, 2007. "Temporary Agency Work in Portugal, 1995–2000," IZA Discussion Papers 3144, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp3144
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    References listed on IDEAS

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    1. 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.
    2. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages 189-213, June.
    3. Susan N. Houseman, 2001. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
    4. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1409-1448.
    5. Carolyn J. Heinrich & Peter R. Mueser & Kenneth R. Troske, 2005. "Welfare to Temporary Work: Implications for Labor Market Outcomes," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 154-173, February.
    6. Lewis M. Segal & Daniel G. Sullivan, 1998. "Wage differentials for temporary services work: evidence from administrative data," Working Paper Series WP-98-23, Federal Reserve Bank of Chicago.
    7. Michael Kvasnicka, 2005. "Does Temporary Agency Work Provide a Stepping Stone to Regular Employment?," SFB 649 Discussion Papers SFB649DP2005-031, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    8. Lewis M. Segal & Daniel G. Sullivan, 1997. "The Growth of Temporary Services Work," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 117-136, Spring.
    9. Antoni, Manfred & Jahn, Elke J., 2006. "Do changes in regulation affect employment duration in temporary work agencies?," Discussion Papers 44, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    10. Chris Forde & Gary Slater, 2005. "Agency Working in Britain: Character, Consequences and Regulation," British Journal of Industrial Relations, London School of Economics, vol. 43(2), pages 249-271, June.
    11. Amuedo-Dorantes, Catalina & Malo, Miguel & Muñoz-Bullón, Fernando, 2006. "The Role of Temporary Help Agencies in Facilitating Temp-to-Perm Transitions," IZA Discussion Papers 2177, Institute of Labor Economics (IZA).
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    Cited by:

    1. Sarah Hamersma & Carolyn Heinrich & Peter Mueser, 2014. "Temporary Help Work: Earnings, Wages, and Multiple Job Holding," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(1), pages 72-100, January.
    2. Hamersma, Sarah & Heinrich, Carolyn J. & Mueser, Peter R., 2012. "Temporary Help Work: Compensating Differentials and Multiple Job-Holding," IZA Discussion Papers 6759, Institute of Labor Economics (IZA).
    3. António B. Moniz, 2008. "The transformation of work? A quantitative evaluation of changes in work in Portugal," IET Working Papers Series 07/2008, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology.

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    More about this item

    Keywords

    matched employer-employee data; temporary help service; Portuguese labor market; temporary work agencies;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

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