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Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers?

Author

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  • Jahn, Elke J.

    () (University of Bayreuth)

  • Pozzoli, Dario

    () (Copenhagen Business School)

Abstract

It is a well-known fact that temporary agency workers have to accept high pay penalties. However, remarkably little is known about the remuneration of workers who are frequently employed in this sector or who are employed for a substantial length of time. Based on a rich administrative data set, we estimate the effects of the intensity of agency employment on the temp wage gap and post-temp earnings in Germany. Using a two-stage selection-corrected method in a panel data framework, we show that the wage gap for temps with low treatment intensity is high but decreases with exposure to the sector. It seems that temps are able to accumulate human capital while being employed in this sector. Temps who move to permanent jobs have to accept a sizeable wage disadvantage at first, indicating that temporary agency employment might stigmatise workers. However, agency employment does not seem to leave a long-lasting scar.

Suggested Citation

  • 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).
  • Handle: RePEc:iza:izadps:dp5837
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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).
    3. 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.

    More about this item

    Keywords

    dose response function approach; treatment intensity; temporary agency employment; wages; Germany;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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