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The Role of Temporary Agency Employment in Tight Labor Markets

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Abstract

The authors use case study evidence from hospitals and auto parts manufacturers to investigate why employers used—and even increased their use of—temporary help agencies during a period of tight labor markets in the 1990s. In high-skill occupations, the evidence suggests employers paid substantially more to agency help than to regular employees in large part to gain additional time to recruit employees for permanent positions and thereby avoid raising wages for new hires and existing employees. In low-skill occupations, temporary help agencies appear to have facilitated the use of more “risky†workers by lowering their wages and benefits and the costs associated with turnover. As in high-skill occupations, the use of agency temporaries in low-skill occupations relieved pressure on companies facing tight labor markets to raise employees' wages, and may have contributed to the stagnant wage growth and low unemployment observed in the 1990s.
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  • Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, "undated". "The Role of Temporary Agency Employment in Tight Labor Markets," Upjohn Working Papers and Journal Articles snhakge2003, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:snhakge2003
    Note: Appears in Industrial and Labor Relations Review 57(1): 105-127
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    1. Edward J. Schumacher, 2001. "The Earnings and Employment of Nurses in an Era of Cost Containment," ILR Review, Cornell University, ILR School, vol. 55(1), pages 116-132, October.
    2. Kandel, Eugene & Pearson, Neil D., 2001. "Flexibility versus Commitment in Personnel Management," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 515-556, December.
    3. Garth Mangum & Donald Mayall & Kristin Nelson, 1985. "The Temporary Help Industry: A Response to the Dual Internal Labor Market," ILR Review, Cornell University, ILR School, vol. 38(4), pages 599-611, July.
    4. Fred A. Bellemore, 1998. "Temporary Employment Decisions of Registered Nurses," Eastern Economic Journal, Eastern Economic Association, vol. 24(3), pages 265-279, Summer.
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    Cited by:

    1. Cristini, Annalisa & Origo, Federica & Pinoli, Sara, 2017. "The healthy fright of losing a good one for a bad one," Journal of Economic Psychology, Elsevier, vol. 59(C), pages 129-144.
    2. René Böheim & Martina Zweimüller, 2013. "The Employment of Temporary Agency Workers in the UK : For or Against the Trade Unions?," Economica, London School of Economics and Political Science, vol. 80(317), pages 65-95, January.
    3. Schiersch, Alexander, 2016. "Considering the (Un)observed: temporary agency work in productivity estimations," Annual Conference 2016 (Augsburg): Demographic Change 145749, Verein für Socialpolitik / German Economic Association.
    4. 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.
    5. Carolyn J. Heinrich & Peter R. Mueser & Kenneth R. Troske, 2009. "The Role of Temporary Help Employment in Low-Wage Worker Advancement," NBER Chapters,in: Studies of Labor Market Intermediation, pages 399-436 National Bureau of Economic Research, Inc.
    6. Jahn, Elke Jutta & Rosholm, Michael, 2015. "The Cyclicality of the Stepping Stone Effect of Temporary Agency Employment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113117, Verein für Socialpolitik / German Economic Association.
    7. Alexander Schiersch, 2015. "TFP, Labor Productivity and the (Un)observed Labor Input: Temporary Agency Work," Discussion Papers of DIW Berlin 1532, DIW Berlin, German Institute for Economic Research.
    8. 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).
    9. John T. Addison & Christopher J. Surfield, 2005. "‘Atypical Work’ and Compensation," GEMF Working Papers 2005-14, GEMF, Faculty of Economics, University of Coimbra.
    10. Busk, Henna & Jahn, Elke J. & Dauth, Christine, 2015. "Do Changes in Regulation Affect Temporary Agency Workers' Job Satisfaction?," IZA Discussion Papers 8803, Institute for the Study of Labor (IZA).
    11. Peter H. Cappelli & JR Keller, 2013. "A Study of the Extent and Potential Causes of Alternative Employment Arrangements," ILR Review, Cornell University, ILR School, vol. 66(4), pages 874-901, July.
    12. Jahn, Elke J. & Rosholm, Michael, 2018. "The Cyclicality of the Stepping-Stone Effect of Temporary Agency Employment," IZA Discussion Papers 11377, Institute for the Study of Labor (IZA).
    13. Susan N. Houseman & Carolyn Heinrich, 2015. "Temporary Help Employment in Recession and Recovery," Upjohn Working Papers and Journal Articles 15-227, W.E. Upjohn Institute for Employment Research.
    14. Andrew Goodman-Bacon & Yukako Ono, 2007. "Who are temporary nurses?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 2-13.
    15. Marloes de Graaf-Zijl, 2005. "Compensation of On-call and Fixed-term Employment: the Role of Uncertainty," Tinbergen Institute Discussion Papers 05-120/3, Tinbergen Institute.
    16. Kim Hoque & Ian Kirkpatrick & Alex De Ruyter & Chris Lonsdale, 2008. "New Contractual Relationships in the Agency Worker Market: The Case of the UK's National Health Service," British Journal of Industrial Relations, London School of Economics, vol. 46(3), pages 389-412, September.

    More about this item

    Keywords

    workers' compensation; disability; social security;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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