Uwe Neumann (p)

Ana Maria Diaz Escobar

In many European countries the number of employees hired by client firms via temporary work agencies has increased considerably over the past two decades. Today, they represent around 2% of the total workforce in the European Union. Since the level of employment in the tempo-rary agency sector has been found to precede cyclical fluctuation, temporary agency work may serve as a “buffer” that helps firms to adapt to variation in their demand for labour. Due to regional differentials, the buffer function is likely to be associated with the characteristics of specific sectors and regions. Using Germany as a case study, this paper explores whether client firms utilised temporary agency work as a strategic buffer over a period of nine years (2006-2014) before, during and after the crisis of 2008/2009. Drawing on microdata from a repre-sentative 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. As criticised by opponents of temporary agency work, hiring of temporary agency workers is connected more generally with cuts in jobs and wages. In many firms it is possibly part of a business strategy relying on flexible recruitment. In specific regions, such flexibility may support adaptation of client firms to economic change.

Ana Maria Diaz Escobar (p), Luz Magdalena Salas

Uwe Neumann

This paper explores whether firms redline workers using a controlled experiment in Bogota. Firms may redline workers for two main reasons. First, employers might be reluctant to hire individuals living far away because long commutes may affect the productivity of workers. Second, firms might have discriminatory preferences relative to the reputation of the place of residence of their potential employee. In our experimental design we aim to explore to what extent labor market, measured as access to employment, discriminates against places of residence as the result of these mechanisms. Moreover, we aim to explore which of the two channels drive the empirical results. We use a correspondence test by responding to job advertisements posted by firms in newspapers. We send three identical fictitious résumés to every single job offer posted on the main job vacancy web pages. The only difference between the résumés being the residential address of the job applicant. Two of them are located at the same geographic distance (and duration) but one is located in a low crime
neighborhood while the other is located in a high crime area. The third résumé corresponds to an individual located in a low crime neighborhood at a higher distance. Results suggest that firms do redline low-skilled males in Bogota.