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

28 Pages Posted: 30 Mar 2020 Last revised: 18 Nov 2021

See all articles by Andres Drenik

Andres Drenik

The University of Texas at Austin

Simon Jäger

Massachusetts Institute of Technology (MIT)

Pascuel Plotkin

Independent

Benjamin Schoefer

University of California, Berkeley

Multiple version iconThere are 3 versions of this paper

Date Written: March 2020

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 the workplace-specific pay premia earned by regular workers in user firms: the midpoint between the benchmark for insiders (one) and the competitive spot-labor market benchmark (zero).

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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 (March 2020). Available at SSRN: https://ssrn.com/abstract=3563959 or http://dx.doi.org/10.2139/ssrn.3563959

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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Cambridge, MA 02139-4307
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Pascuel Plotkin

Independent ( email )

Benjamin Schoefer

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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