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Reassessing the Wage Penalty for Temps in Germany

Elke J. Jahn

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

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Date posted: August 27, 2008  

Suggested Citation

Jahn, Elke J., Reassessing the Wage Penalty for Temps in Germany. IZA Discussion Paper No. 3663. Available at SSRN: https://ssrn.com/abstract=1251031 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Contact Information

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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