TY  - THES
T1  - Essays on the impact of temporary agency work on wages and employment
A1  - Baudy,Philipp
Y1  - 2018/06/11
N2  - The thesis contributes to the theoretical discussion of the effects of temporary agency work and picks up three different issues that have not been analyzed yet. It provides three theoretical models 1) to discuss the optimal economic behavior of firms and labor unions when firms threaten to use temporary agency employment in the bargaining process, 2) to examine the macroeconomic effects of the deregulation of temporary agency work that took, and still takes, place in many countries in the last decades, and 3) to study how the technological choice of firms in the economy changes due to the legal deregulation of temporary agency work.
The first model focuses on the question of the optimal economic behavior of the bargaining parties. Developing a monopoly union model, it analyzes how and to what extent firms can strategically use the threat of temporary agency employment to dampen the wage claims of labor unions. Furthermore, the model discusses how labor unions optimally behave and respond to these threats. It is shown that labor unions may find it optimal to accept lower wages to prevent firms from using temporary agency workers. The decision of the labor union to oppose or accept the firms threat is based on the attempt to minimize the loss in its utility. While labor unions suffer from the potential use of temporary agency employment in terms of their utility, firms gain from increasing profits and an extended employment level per firm. If unions do not oppose temporary agency work, the model suggests that labor unions increase their wage claims for the remaining regular workers to a level that even exceeds the claims of the labor union if there is no threat at all. Hence, an intensive use of temporary agency workers in high-wage firms may be the cause and not the consequence of the high wage level in those firms.
The second model concentrates on the effects of the deregulation of temporary agency employment on macroeconomic determinants like wages, unemployment, and the employment structure. Using the matching framework, it provides a first contribution that combines labor unions and temporary agency work in this modeling setup.  Large firms produce differentiated goods employing regular workers that are organized in labor unions and, optionally, using temporary agency work for parts of the production. Furthermore, there is a special emphasis on the flows from temporary agency to regular employment, which is modeled as on-the-job search. The model shows that the deregulation of temporary agency work leads to a reduction in overall unemployment. Surprisingly, this favors regular employment due to lower wages that arise from the impact that the more attractive production alternative temporary agency employment has on labor union wage bargaining. The most interesting finding, however, is that there is a hump-shaped relationship between the degree of institutional deregulation of temporary agency work and its rate of employment. This is explained by the fact that voluntary non-institutional, firm-level regulations come into play and get the more important, the less regulated temporary agency employment is. They have a counter-effect on the costs of temporary agency work that is lowered by the deregulation. Additionally, even if the model does not conceal that individual workers suffer from declining wages, it shows that regular employment benefits from the deregulation of temporary agency employment.
The third model examines how the technological choice of firms in an economy changes due to the availability of temporary agency employment as a production alternative that gets cheaper and, therefore, more attractive the less regulated it is. The model uses the matching framework with two types of jobs that differ in their productivity and workers that are randomly matched with temporary or regular job vacancies. The analysis reveals how the decision of firms with which technology to enter the market and to produce with changes with the deregulation of temporary agency employment. Regular and temporary agency workers produce the same good but use different technologies. Temporary agency work is less expensive to hire than regular workers as direct labor costs are lower. However, job destruction and labor turnover is higher in this employment type. The model rather intuitively suggests that the legal deregulation of temporary agency employment deteriorates the technology level used in the economy, leads to a more intensive use of the less advanced technology, and increases temporary agency employment. Regular workers are shown to suffer from declining wages while the labor income of temporary agency workers increases. However, the model also provides an advice for economic policy by suggesting that subsidies or other forms of support for directed investments in technological progress of more advanced technologies may be suitable to dampen the macroeconomic effects of the deregulation of temporary agency employment.
KW  - Gewerkschaft
KW  - Matching
KW  - Leiharbeit
KW  - Beschäftigung
KW  - Lohnbildung
CY  - Hohenheim
PB  - Kommunikations-, Informations- und Medienzentrum der Universität Hohenheim
AD  - Garbenstr. 15, 70593 Stuttgart
UR  - http://opus.uni-hohenheim.de/volltexte/2018/1490
ER  -