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Welfare to Temporary Work: Implications for Labor Market Outcomes

  • Heinrich, Carolyn J.


    (University of Texas at Austin)

  • Mueser, Peter R.


    (University of Missouri-Columbia)

  • Troske, Kenneth


    (University of Kentucky)

Recent welfare reforms are prompting some state and local welfare agencies to use temporary help service firms to help place welfare recipients into jobs. Concerns have arisen that these jobs are more likely to pay low wages, provide fewer benefits, and offer less stability. We explore the effects of temporary help firms on the labor market outcomes of welfare recipients by looking at the characteristics of welfare recipients who go to work for temporary service firms and by examining their subsequent employment and welfare dynamics. We find that although welfare recipients who go to work for temporary help service firms have lower initial wages they experience faster subsequent wage growth. Two years later, their wages are only slightly below workers who initially had jobs in other sectors, and they are no more likely to be unemployed and are only slightly more likely to remain on welfare.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 584.

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Length: 47 pages
Date of creation: Sep 2002
Date of revision:
Publication status: published in: Review of Economics and Statistics, 2005, 87 (1), 154-173
Handle: RePEc:iza:izadps:dp584
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  1. Julia Lane & Kelly S. Mikelson & Pat Sharkey & Doug Wissoker, 2003. "Pathways to work for low-income workers: The effect of work in the temporary help industry," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 581-598.
  2. Gyourko, Joseph & Tracy, Joseph, 1988. "An Analysis of Public- and Private-Sector Wages Allowing for Endogenous Choices of Both Government and Union Status," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 229-53, April.
  3. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," NBER Working Papers 6699, National Bureau of Economic Research, Inc.
  4. Michael D. S. Morris & Alexander Vekker, 2001. "An Alternative Look at Temporary Workers, Their Choices, and the Growth in Temporary Employment," Journal of Labor Research, Transaction Publishers, vol. 22(2), pages 373-390, April.
  5. 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.
  6. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2000. "Temporary Jobs: Stepping Stones or Dead Ends?," IZA Discussion Papers 205, Institute for the Study of Labor (IZA).
  7. Susan N. Houseman & Anne E. Polivka, 1999. "The Implications of Flexible Staffing Arrangements for Job Stability," Upjohn Working Papers and Journal Articles 99-56, W.E. Upjohn Institute for Employment Research.
  8. Lewis M. Segal & Daniel G. Sullivan, 1997. "Temporary services employment durations: evidence from state UI data," Working Paper Series, Macroeconomic Issues WP-97-23, Federal Reserve Bank of Chicago.
  9. V. J. Hotz & J. K. Scholz, . "Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data," Institute for Research on Poverty Discussion Papers 1224-01, University of Wisconsin Institute for Research on Poverty.
  10. Timothy J. Bartik, 1997. "Short-Term Employment Persistence for Welfare Recipients: The "Effects" of Wages, Industry, Occupation and Firm," Upjohn Working Papers and Journal Articles 97-46, W.E. Upjohn Institute for Employment Research.
  11. LaDonna Pavetti & Michelle Derr & Jacquelyn Anderson & Carole Trippe & Sidnee Paschal, 2000. "The Role of Intermediaries in Linking TANF Recipients With Jobs," Mathematica Policy Research Reports 5f3004cdaef34d17a1f8de917, Mathematica Policy Research.
  12. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
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