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Inside The Black Box of Temporary Help Agencies

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  • Kvasnicka, Michael

Abstract

Based on a new panel dataset created in close cooperation with one of the largest temporary help agencies (THAs) in Germany, this paper presents novel evidence on key aspects of temporary agency work, a segment of the labor market that despite its growing importance remains underresearched. In particular, we provide detailed information on the internal operation of a THA and the allocative function it performs both as an intermediate demander and as a final supplier of labor in this submarket. In addition to offering first examination of effective wage and fee schedules, we document, among others, the rise of on-call hiring, recalls and fixed-term contracts in the recruitment of workers, the reasons for job termination, as well as the volume of labor actually contracted per worker and per worker-client match. We show that the THA manages to utilize effectively its workforce in assignments and keeps idle labor at a minimum. In fact, more than a third of workers exhibit multiple client engagements. One-off recruitment and dismissal costs per worker can thus effectively be spread across different clients.

Suggested Citation

  • Kvasnicka, Michael, 2003. "Inside The Black Box of Temporary Help Agencies," SFB 373 Discussion Papers 2003,43, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  • Handle: RePEc:zbw:sfb373:200343
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    References listed on IDEAS

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    1. Kvasnicka, Michael & Werwatz, Axel, 2002. "On the wages of temporary help service workers in Germany," SFB 373 Discussion Papers 2002,70, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    2. Lewis M. Segal & Daniel G. Sullivan, 1998. "Wage differentials for temporary services work: evidence from administrative data," Working Paper Series WP-98-23, Federal Reserve Bank of Chicago.
    3. Neugart, Michael & Storrie, Donald, 2002. "Temporary work agencies and equilibrium unemployment," Working Papers in Economics 83, University of Gothenburg, Department of Economics.
    4. 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.
    5. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
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    Cited by:

    1. Ochel, Wolfgang, 2007. "Contracting out Employment Services Involving Temporary Agency Work in Germany," MPRA Paper 13820, University Library of Munich, Germany.
    2. Antoni, Manfred & Jahn, Elke J., 2006. "Do changes in regulation affect employment duration in temporary work agencies?," IAB Discussion Paper 200618, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Michael Kvasnicka, 2005. "Does Temporary Agency Work Provide a Stepping Stone to Regular Employment?," SFB 649 Discussion Papers SFB649DP2005-031, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    4. Florian Baumann & Mario Mechtel & Nikolai Stähler, 2011. "Employment Protection and Temporary Work Agencies," LABOUR, CEIS, vol. 25(3), pages 308-329, September.
    5. Elke J. Jahn & Wolfgang Ochel, 2005. "Contracting Out Temporary Help Services in Germany," CESifo Working Paper Series 1580, CESifo Group Munich.
    6. Heywood, John S. & Siebert, W. Stanley & Wei, Xiangdong, 2006. "Examining the Determinants of Agency Work: Do Family Friendly Practices Play a Role?," IZA Discussion Papers 2413, Institute for the Study of Labor (IZA).
    7. Ard den Reijer, 2007. "Identifying Regional and Sectoral Dynamics of the Dutch Staffing Labour Cycle," DNB Working Papers 153, Netherlands Central Bank, Research Department.
    8. 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).
    9. Michael C. Burda & Michael Kvasnicka, 2006. "Zeitarbeit in Deutschland: Trends und Perspektiven," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(2), pages 195-225, May.
    10. Michael Kvasnicka, 2009. "Does Temporary Help Work Provide a Stepping Stone to Regular Employment?," NBER Chapters,in: Studies of Labor Market Intermediation, pages 335-372 National Bureau of Economic Research, Inc.
    11. Michael Schlese, 2012. "Wie viele Leiharbeitskräfte gibt es?: Zur Vergleichbarkeit der Fallzahlen bei Leiharbeit zwischen SOEP und ANÜSTAT," SOEPpapers on Multidisciplinary Panel Data Research 486, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Jahn Elke J., 2010. "Reassessing the Pay Gap for Temps in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(2), pages 208-233, April.
    13. den Reijer, Ard H.J., 2011. "Regional and sectoral dynamics of the Dutch staffing labor cycle," Economic Modelling, Elsevier, vol. 28(4), pages 1826-1837, July.

    More about this item

    Keywords

    temporary help; agency work; flexible employment;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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