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Identifying the Substitution Effect of Temporary Agency Employment

  • Jahn, Elke J.


    (Institute for Employment Research (IAB), Nuremberg)

  • Weber, Enzo


    (Institute for Employment Research (IAB), Nuremberg)

This paper fills a gap in the literature by investigating whether temporary agency employment substitutes regular employment. To take into account the interaction between the two employment forms, we identify a SVAR model with correlated innovations by volatility regimes. We show that a positive shock to temporary agency employment increases overall employment, but also leads to substitution of regular jobs.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6471.

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Length: 10 pages
Date of creation: Apr 2012
Date of revision:
Publication status: forthcoming in: Macroeconomic Dynamics
Handle: RePEc:iza:izadps:dp6471
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  1. David H. Autor & Susan N. Houseman, . "Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from "Work First"," Upjohn Working Papers and Journal Articles dhasnh2010, W.E. Upjohn Institute for Employment Research.
  2. Sentana, Enrique & Fiorentini, Gabriele, 2001. "Identification, estimation and testing of conditionally heteroskedastic factor models," Journal of Econometrics, Elsevier, vol. 102(2), pages 143-164, June.
  3. Weber, Enzo, 2009. "Structural Conditional Correlation," University of Regensburg Working Papers in Business, Economics and Management Information Systems 434, University of Regensburg, Department of Economics.
  4. 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.
  5. Markku Lanne & Helmut Luetkepohl, 2006. "Structural Vector Autoregressions with Nonnormal Residuals," CESifo Working Paper Series 1651, CESifo Group Munich.
  6. Kahn, Lawrence M., 2010. "Employment protection reforms, employment and the incidence of temporary jobs in Europe: 1996-2001," Labour Economics, Elsevier, vol. 17(1), pages 1-15, January.
  7. Jahn, Elke J., 2008. "Reassessing the Wage Penalty for Temps in Germany," IZA Discussion Papers 3663, Institute for the Study of Labor (IZA).
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