Reassessing the Wage Penalty for Temps in Germany
Elke J. Jahn
Government of the Federal Republic of Germany - Institute for Employment Research (IAB); University of Aarhus - School of Business and Social Sciences; Institute for the Study of Labor (IZA); University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Department of Economics
IZA Discussion Paper No. 3663
As a consequence of the rapid growth of temporary agency employment in Germany, the debate on the poor working conditions of temps, specifically their remuneration, has intensified recently. Using administrative data, the paper shows that the wage gap for German temp workers is rather large and varies between occupation and region. But temps already suffer from a marked wage decline before entering the temporary help sector. Nevertheless, temporary agency employment does not leave a long lasting scar. Two years after leaving the sector, temps no longer suffer from a wage penalty. A recent change in the law set a high incentive for temporary help agencies to pay their workers according to a sectoral collective agreement. Surprisingly, the unionization of the sector could not bring the widening wage gap to a halt.
Number of Pages in PDF File: 39
Keywords: temporary agency employment, wage differential, earnings, Germany, reform
JEL Classification: J30, J31, J42
Date posted: August 27, 2008
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