Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data

Andres Drenik, Simon Jäger, Pascuel Plotkin and Benjamin Schoefer
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Andres Drenik: UT Austin
Pascuel Plotkin: UBC

The Review of Economics and Statistics, 2023, vol. 105, issue 1, 206-216

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. This 49% pass-through constitutes the midpoint between the benchmarks for insiders (one) and the competitive spot-labor market (zero).

Date: 2023
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Working Paper: Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data (2020)
Working Paper: Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data (2020)
Working Paper: Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data (2020)
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