Working Paper: NBER ID: w26891
Authors: Andres Drenik; Simon Jäger; Miguel Pascual 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).
Keywords: outsourced labor; temp agency work; wage premia; Argentina
JEL Codes: J31; J53; K31; L24; M52; M54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| standard deviation of user firm pay premia for temp workers is significantly lower than that for regular workers (J39) | markdown in pay for temp workers (J33) |
| temp agency workers receive approximately 49% of the workplace-specific pay premia earned by regular workers (J31) | markdown in pay for temp workers (J33) |
| high-wage temp workers tend to sort into high-paying workplaces (J29) | elasticity of the worker AKM fixed effect to the firm fixed effects (J29) |
| high-wage temp workers tend to sort into high-paying workplaces (J29) | elasticity of the worker AKM fixed effect to the firm fixed effects for regular workers (J29) |