Do Temporary Help Agencies Help? Temporary employment transitions for low-skilled workers

Raquel Carrasco (), Ismael Gálvez Iniesta and Belén Jerez

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We investigate how being employed by a Temporary Help Agency (THA) affects transition rates to alternative labor market states for low-skilled workers. Our approach is based on the estimation of competing risk discrete duration models, and reveals the importance of accounting for short duration dependence. We use Spanish administrative data for the period 2005-2017. We find that having a THA contract rather than a direct-hire temporary contract increases the probability of entering into unemployment or another agency job at all durations. Agency workers are more likely to transition to permanent employment than their direct-hire counterparts, but these transitions are very infrequent for both. The positive effect of THA employment on the probability of transitioning to a permanent job is procyclical. By contrast, the positive effect on the probability of entering unemployment (or another agency job) increased during the Great Recession relative to the previous economic expansion, and has remained high during the recovery. In words, agency jobs in Spain are characterized by higher unemployment risk and persistence than regular temporary jobs, and these differences have intensified in recent years. Accouting for unobserved heterogeneity does not alter our main results.

Keywords: Temporary; Help; Agency; Temporary; Employment; Competing; Risk; Duration; Models; Unobserved; Heterogeneity (search for similar items in EconPapers)
JEL-codes: C34 J2 J24 J4 J62 (search for similar items in EconPapers)
Date: 2022-05-10
New Economics Papers: this item is included in nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Do Temporary Help Agencies Help? Temporary Employment Transitions for Low-Skilled Workers (2022)
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