The productivity effect of temporary agency work: Evidence from German panel data

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This study investigates the effect of temporary agency work on the user firm's productivity. We hypothesise that using temporary agency work to enhance numerical flexibility and to screen job candidates may increase productivity, whereas temporary workers' lower firm-specific human capital and spillover effects on the user's permanent employees may adversely affect productivity. Other than the sparse existing literature on this issue, we exploit a large panel data set and control for time-invariant and time-varying unobserved heterogeneity by using the system GMM estimator. We find a robust hump-shaped effect of the extent of temporary agency work on the user firm's productivity.

Original languageEnglish
JournalThe Economic Journal
Issue number562
Pages (from-to)F216-F235
Number of pages20
Publication statusPublished - 01.08.2012
Externally publishedYes