Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data
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rest_a_01037.pdf
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Accepted version
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Author(s)
Drenik, Andres
Jäger, Simon
Plotkin, Pascuel
Schoefer, Benjamin
Date Issued
2021
Journal
The Review of Economics and Statistics
Publisher
MIT Press - Journals
Citation
Drenik, Andres, Jäger, Simon, Plotkin, Pascuel and Schoefer, Benjamin. 2021. "Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data." The Review of Economics and Statistics.
Version
Author's final manuscript
Abstract
Abstract
We estimate how much firms differentiate pay premia between regular and outsourced workers in temp agency work arrangements. We leverage unique Argentinian administrative data that feature links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We estimate that a high-wage user firm that pays a regular worker a 10% premium pays a temp worker on average only a 4.9% premium, compared to what these workers would earn in a low-wage user firm in their respective work arrangements—the midpoint between the benchmarks for insiders (one) and the competitive spot-labor market (zero).
We estimate how much firms differentiate pay premia between regular and outsourced workers in temp agency work arrangements. We leverage unique Argentinian administrative data that feature links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We estimate that a high-wage user firm that pays a regular worker a 10% premium pays a temp worker on average only a 4.9% premium, compared to what these workers would earn in a low-wage user firm in their respective work arrangements—the midpoint between the benchmarks for insiders (one) and the competitive spot-labor market (zero).
MIT Department
Massachusetts Institute of Technology. Department of Economics
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DOI of Published Version
https://doi.org/10.1162/REST_A_01037
