Do temporary-help jobs improve labor market outcomes for low-skilled workers? Evidence from “Work First”. (Autor & Houseman 2010)
Autor, D. H., & Houseman, S. N. (2010). Do temporary-help jobs improve labor market outcomes for low-skilled workers? Evidence from “Work First”. American Economic Journal: Applied Economics, 2(3), 96–128.
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Autor, D. H., & Housemann, S. N. (2005). Do temporary help jobs improve labor market outcomes for low-skilled workers? Evidence from ‘Work First’. (NBER Working Paper No. 11743). Cambridge, MA: National Bureau of Economic Research.
- The study’s objective was to examine the impact of temporary-help and direct-hire jobs through the Work First program (a welfare-to-work program) on the earnings and employment of low-skilled workers in Detroit.
- The authors use a nonexperimental design that uses key features of the Work First program to compare the employment and earnings of participants placed in temporary- or permanent-hire positions. Work First program participants are assigned to different local contractors in their district on a rotating basis. The contractors assist participants with job placement, but vary the emphasis they place on temporary-hire or direct-hire positions; the authors use this variation across contractors to compare the employment and earnings of participants in different types of job placement.
- The study found that the average employment probability and quarterly earnings of those who found a direct-hire job increased significantly in the eight quarters following program participation compared with that of those who found a temporary-help job.
- The quality of causal evidence presented in this report is moderate because it is based on a well-implemented nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to temporary-hire and direct-hire job placements, but other factors might also have contributed.
Features of the Work First Program
In Michigan, Temporary Assistance for Needy Families applicants are assigned to the Work First program if they do not meet minimum work requirements. Work First is a welfare-to-work program intended to provide short-term intensive job placement services. Work First assigns participants to a job placement contractor in their geographic area who assists in finding either temporary-help or direct-hire job placements. Each contractor places a different emphasis on which of the two types of employment they help participants secure. Temporary-help positions offer quick entry into paid employment but typically only last a short period of time. Direct-hire positions are considered a typical job that any individual on the job market could obtain.
Features of the Study
The study included a sample of 37,163 participants assigned to the Work First program from 1999 to 2003 in Detroit. The average age of participants was 30 years old; 94 percent of participants were female and 97 percent African American. The comparison group consisted of those assigned to Work First but were unable to find either a temporary-help or a direct-hire job placement.
The authors used Michigan Unemployment Insurance records and data from the Work First program to compare the employment and earnings of those who were placed in a temporary-hire job placement with those who were placed in a direct-hire job position; the authors also compared those who were placed in either a temporary- or direct-hire position with those who were enrolled in the Work First program but were unable to find employment during the first seven quarters after program participation.
- Earnings. Work First participants placed in direct-hire jobs significantly increased their average quarterly earnings by $493 from quarters two to eight after contractor assignment. By comparison, the effect of temporary-job placement on earnings was not significant from quarters two to eight. In additional, the average quarterly earnings of those who found a job (either temporary- or direct-hire), compared with that of those who were assigned to the Work First program but were unable to find a job were significantly higher from quarters two to eight following program assignment ($248).
- Employment. The study found that the average probability of being employed from quarters two to eight following program assignment increased significantly by 15 percentage points for those who were placed in direct-hire positions. Conversely, the study found that temporary-hire placement did not significantly increase the average probability of being employed from quarters two and eight following program assignment.
Considerations for Interpreting the Findings
The study examined 37,163 Work First participants; however, the sample only included 24,903 unique participants, as many participants enrolled in the program multiple times. Participants who enrolled multiple times in the Work First program might have behaved differently from those who enrolled for the first time, and this could affect observed earnings and employment outcomes.
The authors attempted to account for the motivation of participants to find work in their statistical analysis using an instrumental variable approach. However, because the participants were Temporary Assistance for Needy Families recipients who were required to meet minimum employment requirements to receive the benefit—but might lose the benefit if they became employed in a well-paying job—the authors’ analysis might not fully account for the participants’ motivations to seek temporary positions.
Causal Evidence Rating
The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to the type of job placement in the Work First program, but other factors might also have contributed.