Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 11-9: Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers?

Elke Jahn () and Dario Pozzoli ()
Additional contact information
Elke Jahn: Department of Economics, Aarhus School of Business, Postal: FRICHSHUSET , Hermodsvej 22, 1st and 2nd floors , DK 8230 Aabyhoej, Denmark
Dario Pozzoli: Department of Economics, Aarhus School of Business, Postal: FRICHSHUSET , Hermodsvej 22, 1st and 2nd floors , DK 8230 Aabyhoej, Denmark

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 e ects 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 rst, 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-codes: J30; J31; J41; J42

42 pages, January 1, 2011

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11-09_eljadpoz.pdf PDF-file 

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