Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers?

39 Pages Posted: 11 Jul 2011

See all articles by Elke J. Jahn

Elke J. Jahn

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

Dario Pozzoli

Aarhus University - School of Business and Social Sciences

Abstract

It is a well-known fact that temporary agency workers have to accept high pay penalties. However, remarkably little is known about the remuneration of workers who are frequently employed in this sector or who are employed for a substantial length of time. Based on a rich administrative data set, we estimate the effects of the intensity of agency employment on the temp wage gap and post-temp earnings in Germany. Using a two-stage selection-corrected method in a panel data framework, we show that the wage gap for temps with low treatment intensity is high but decreases with exposure to the sector. It seems that temps are able to accumulate human capital while being employed in this sector. Temps who move to permanent jobs have to accept a sizeable wage disadvantage at first, indicating that temporary agency employment might stigmatise workers. However, agency employment does not seem to leave a long-lasting scar.

Keywords: temporary agency employment, treatment intensity, dose response function approach, wages, Germany

JEL Classification: J30, J31, J42, J41

Suggested Citation

Jahn, Elke J. and Pozzoli, Dario, Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers?. IZA Discussion Paper No. 5837, Available at SSRN: https://ssrn.com/abstract=1882856

Elke J. Jahn (Contact Author)

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of Bayreuth ( email )

Bayreuth, 95447
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Dario Pozzoli

Aarhus University - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

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