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Employers’ Flexibility and Employment Volatility

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  • Jeffrey B. Wenger
  • Arne L. Kalleberg

Abstract

. Previous analyses of the strong secular growth in personnel supply employment have focused primarily on the relative impacts of demand and supply factors. This industry’s dramatic growth has tended to mask its high degree of volatility, which may be more useful in understanding employers’ motivations for hiring temporary employees. This article examines alternative explanations for the volatility of employment in the temporary supply industry from 1972 to 2000. Using a seemingly unrelated time‐series estimator, we compare the volatility of temporary employment to that of regular full‐time employment. We find that quarterly changes in temporary employment are more sensitive to the business cycle than regular full‐time employment are and argue that temporary employment is likely to have a number of disadvantages as a reemployment strategy during a recession, since temporary employment typically declines during that time. Additionally, employment growth during this period is better explained by employers’ efforts to achieve numerical rather than wage flexibility.

Suggested Citation

  • Jeffrey B. Wenger & Arne L. Kalleberg, 2006. "Employers’ Flexibility and Employment Volatility," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(2), pages 347-382, April.
  • Handle: RePEc:bla:ajecsc:v:65:y:2006:i:2:p:347-382
    DOI: 10.1111/j.1536-7150.2006.00454.x
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    References listed on IDEAS

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    1. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Alexis Rydell & Rune Wigblad, 2011. "Company-level flexicurity during the restructuring process: a model," Transfer: European Review of Labour and Research, , vol. 17(4), pages 547-562, November.
    2. Tatiana Karabchuk, 2016. "The subjective well-being of women in Europe: children, work and employment protection legislation," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 15(2), pages 219-245, November.

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