Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data

29 Pages Posted: 30 Mar 2020

See all articles by Andres Drenik

Andres Drenik

The University of Texas at Austin

Simon Jäger

Massachusetts Institute of Technology (MIT); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics; briq- Institute on Behavior & Inequality

Pascuel Plotkin

Independent

Benjamin Schoefer

University of California, Berkeley

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Abstract

We estimate how much firms differentiate pay premia between regular and outsourced workers. We study temp agency work arrangements where pay setting has previously escaped measurement because existing datasets do not report links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We overcome this measurement challenge by leveraging unique administrative data from Argentina with such links. We estimate that temp agency workers receive 49% of theworkplace-specific pay premia earned by regularworkers in user firms: the midpoint between the benchmark for insiders (one) and the competitive spot-labor market benchmark (zero).

Keywords: outsourcing, temp agencies, non-standard work arrangements, rent sharing

JEL Classification: J31, J53, L24

Suggested Citation

Drenik, Andres and Jäger, Simon and Plotkin, Pascuel and Schoefer, Benjamin, Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data. Available at SSRN: https://ssrn.com/abstract=3562866 or http://dx.doi.org/10.2139/ssrn.3562866

Andres Drenik (Contact Author)

The University of Texas at Austin ( email )

United States

HOME PAGE: http://www.andresdrenik.com

Simon Jäger

Massachusetts Institute of Technology (MIT) ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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IZA Institute of Labor Economics

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briq- Institute on Behavior & Inequality ( email )

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Pascuel Plotkin

Independent ( email )

Benjamin Schoefer

University of California, Berkeley ( email )

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Berkeley, CA 94720
United States

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