Temporary Agency Employment as a Way out of Poverty?

David Autor, Susan Houseman

NBER Working Paper No. 11742
Issued in November 2005
NBER Program(s):Labor Studies, Public Economics

The high incidence of temporary agency employment among participants in government employment programs has catalyzed debate about whether these jobs help the poor transition into stable employment and out of poverty. We provide direct evidence on this question through analysis of a Michigan welfare-to-work program in which program participants were randomly allocated across service providers ('contractors') with different job placement practices. We draw on a telephone survey of contractors and on administrative program data linked with wage records data on all participants entering the program over a three-and-a half-year period. Our survey evidence documents a consensus among contractors that temporary help jobs are generally easier for those with weak skills and experience to obtain, but no consensus on whether temporary help jobs confer long-term benefits to participants. Our analysis of the quasi-experimental data introduced in Autor and Houseman (2005) shows that placing participants in either temporary or direct-hire jobs improves their odds of leaving welfare and escaping poverty in the short term. However, we find that only direct-hire placements help reduce welfare dependency over longer time horizons. Our findings raise questions about the incentive structure of many government employment programs that emphasize rapid placement of program participants into jobs and that may inadvertently encourage high placement rates with temporary help agencies.

download in pdf format
   (151 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11742

Published: Blank, Rebecca, Sheldon Danziger and Robert Schoeni (eds.) Working and Poor: How Economic and Policy Changes are Affecting Low‑Wage Workers. New York: Russell Sage Foundation Publications, 2006.

Users who downloaded this paper also downloaded* these:
Andersson, Holzer, and Lane w13434 Temporary Help Agencies and the Advancement Prospects of Low Earners
Autor and Houseman w11743 Do Temporary Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from 'Work First'
Kvasnicka Does Temporary Help Work Provide a Stepping Stone to Regular Employment?
Heinrich, Mueser, and Troske w13520 The Role of Temporary Help Employment in Low-wage Worker Advancement
Kvasnicka w13843 Does Temporary Help Work Provide a Stepping Stone to Regular Employment?
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us