Temporary Replacement Workers in a Matching Model with Employment at Will

Pietro Garibaldi and Pedro Gomes

No 15503, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In the US almost 3 per cent of employees are absent from their job for reasons other than vacation, but are still technically employed. We argue that firms may find optimal to use temporary replacement workers to fill these vacant positions. We set up a matching model with directed search and double-sided heterogeneity. When a workers is temporarily forced out of the labour market, firms can freely destroy the job, put it in "mothball", or look for a temporary worker to "keep the seat warm". When the latter option is optimal, a market for temporary replacement workers emerges in equilibrium. In a quantitative application to the US labor market, replacement workers represent 2.7 per cent of total employment.

Keywords: replacement workers; short-duration jobs; temporary jobs; worker heterogeneity; firm heterogeneity; employment at will (search for similar items in EconPapers)
JEL-codes: J15 J22 J40 J60 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2022-08
New Economics Papers: this item is included in nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp15503.pdf (application/pdf)

Related works:
Working Paper: Temporary Replacement Workers in a Matching Model With Employment At Will (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp15503

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().