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Temporary agency employment in Germany: A strategic "buffer" for firms and regions in the crisis?

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  • Neumann, Uwe

Abstract

In many European countries the number of employees hired via temporary work agencies has increased considerably over the past two decades, up to around 2% of the total workforce in the European Union today. Different studies have found the demand for agency employment to precede GDP growth. This paper explores to what extent firms utilised agency work as a strategic 'buffer' to adapt to variation in labour demand in Germany over the period 2006-2014, i.e. before, during and after the crisis of 2008/2009. Drawing on microdata from a representative employer survey (IAB Establishment Panel) and statistics on regional labour markets, the analysis finds only limited evidence on a systematic firm-level buffer function of temporary agency work. Rather, in many firms hiring from agencies is possibly part of a business strategy relying on flexible recruitment. An analysis of the average treatment effect on the treated (ATT) using a propensity score matching procedure suggests that particularly in regions with high unemployment, such flexibility during the crisis supported adaptation of client firms to economic change, since they were less reluctant than non-clients to hire after the crisis.

Suggested Citation

  • Neumann, Uwe, 2017. "Temporary agency employment in Germany: A strategic "buffer" for firms and regions in the crisis?," Ruhr Economic Papers 727, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:727
    DOI: 10.4419/86788847
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    More about this item

    Keywords

    Temporary agency work; regional labour markets; establishment data; propensity score matching;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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