Wage Effects of Externalized Work: The Case of Temporary and Part-time Employees

Although there has been substantial growth in the proportion of temporary and part-time workers, there has been little research on the consequences of the form of labor contracting. Using the May 1985 version of the Current Population Survey to examine wage effects, we find that being a temporary or part time worker decreases wages even when occupation, industry, and other individual-level variables are statistically controlled. In addition, the negative wage effect of being a temporary worker is higher for more educated employees. There is no additional negative wage effect of being placed in a temporary position through a temporary help service agency, and there is evidence that such agencies organize less than one-fifteenth of the temporary workforce.