Reassessing the Wage Penalty for Temps in Germany

39 Pages Posted: 27 Aug 2008

See all articles by Elke J. Jahn

Elke J. Jahn

Institute for Employment Research (IAB); University of Bayreuth; IZA Institute of Labor Economics


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.

Keywords: temporary agency employment, wage differential, earnings, Germany, reform

JEL Classification: J30, J31, J42

Suggested Citation

Jahn, Elke J., Reassessing the Wage Penalty for Temps in Germany. IZA Discussion Paper No. 3663, Available at SSRN: or

Elke J. Jahn (Contact Author)

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478

University of Bayreuth ( email )

Bayreuth, 95447

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072

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