Working Paper: CEPR ID: DP14517
Authors: Andres Drenik; Simon Jäger; Pascuel Plotkin; Benjamin Schoefer
Abstract: We estimate how much firms differentiate pay premia between regular and outsourced workers. We study temp agency work arrangements where pay setting has previously escaped measurement because existing datasets do not report links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We overcome this measurement challenge by leveraging unique administrative data from Argentina with such links. We estimate that temp agency workers receive 49% of the workplace-specific pay premia earned by regular workers in user firms: the midpoint between the benchmark for insiders (one) and the competitive spot-labor market benchmark (zero).
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| temp agency workers receive 49% of the workplace-specific pay premia earned by regular workers (J31) | temp agency workers receive lower pay premia than regular workers (J31) |
| elasticity of temp pay premia to regular pay premia (J39) | firms extend their pay premia to outsourced labor (J33) |
| firms extend their pay premia to outsourced labor but only pass on half the amount (J33) | temp agency workers receive lower pay premia than regular workers (J31) |
| higher pay policies for regular workers (J38) | firms that outsource labor (M55) |
| temp agency workers are negatively selected in terms of their AKM worker fixed effects (J68) | temp agency workers receive lower pay premia than regular workers (J31) |
| labor market moving closer to a spot market (J46) | temp workers do not share rents to the same extent as regular workers (J69) |