Looking beyond the bridge: How temporary agency employment affects labor market outcomes

Abstract

We perform a comprehensive analysis of the stepping-stone effect of temporary agency employment for unemployed workers. Using the timing-of-events approach, we not only investigate whether agency employment is a bridge into regular employment but also analyze its effect on post-unemployment wages and job stability for Danish unemployed workers. We find evidence for large positive treatment effects, particularly for immigrants. There is also some indication that a higher treatment intensity increases the likelihood to leave unemployment to a regular job. Our results show that agency employment is even more effective in tight labor markets, where user firms use agency employment predominantly to screen workers to fill permanent posts. Finally, our results suggest that agency employment may improve subsequent match quality in terms of wages and job duration.

Cite article

Jahn, E. & Rosholm, M. (2014): Looking beyond the bridge: How temporary agency employment affects labor market outcomes. In: European Economic Review, Vol. 65, No. January, p. 108-125. DOI:10.1016/j.euroecorev.2013.11.001