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Temporary Agency Employment as a Way out of Poverty?

  • David Autor

    ()

    (MIT and NBER)

  • Susan Houseman

    ()

    (W.E. Upjohn Institute for Employment Research)

The high incidence of temporary agency employment among participants in government employment programs has catalyzed debate about whether these jobs help the poor transition into stable employment and out of poverty. We provide direct evidence on this question through analysis of a Michigan welfare-to-work program in which program participants were randomly allocated across service providers (‘contractors') with different job placement practices. We draw on a telephone survey of contractors and on administrative program data linked with wage records data on all participants entering the program over a three-and-a half-year period. Our survey evidence documents a consensus among contractors that temporary help jobs are generally easier for those with weak skills and experience to obtain, but no consensus on whether temporary help jobs confer long-term benefits to participants. Our analysis of the quasi- experimental data introduced in Autor and Houseman (2005) shows that placing participants in either temporary or direct-hire jobs improves their odds of leaving welfare and escaping poverty in the short term. However, we find that only direct-hire placements help reduce welfare dependency over longer time horizons. Our findings raise questions about the incentive structure of many government employment programs that emphasize rapid placement of program participants into jobs and that may inadvertently encourage high placement rates with temporary help agencies.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 05-123.

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Date of creation: Aug 2005
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Handle: RePEc:upj:weupjo:05-123
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  1. Susan N. Houseman, 2000. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," Upjohn Working Papers and Journal Articles 01-67, W.E. Upjohn Institute for Employment Research.
  2. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
  3. David Autor & Susan Houseman, 2009. "Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from 'Work First'," Upjohn Working Papers and Journal Articles 05-124, W.E. Upjohn Institute for Employment Research.
  4. Joshua Angrist, 2004. "Treatment Effect Heterogeneity in Theory and Practice," Econometric Society 2004 North American Winter Meetings 186, Econometric Society.
  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. David H. Autor, 2000. "Why Do Temporary Help Firms Provide Free General Skills Training?," NBER Working Papers 7637, National Bureau of Economic Research, Inc.
  7. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects, and Econometric Policy Evaluation," Econometrica, Econometric Society, vol. 73(3), pages 669-738, 05.
  8. 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.
  9. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
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