To fight long-term unemployment in Germany, a newpromotional program by the German Federal government startedin October 1994 - "Guidelines for the promotion ofreintegrating the hard-to-place unemployed by means of loansand subsidies to Temporary Employment Agencies". Theprogramme, that was limited to the period from 10/01/94 to12/31/96, aimed at integrating unemployed people withreintegration difficulties into the primary labour market.The subsidies granted by the programme resulted in anincreased trend towards "non-profit temping", which on theone hand led to the formation of new non-profit tempagencies and on the other hand led to an extension of theactivities of a number of existing non-profit organisations.

Institutions engaged in "non-profit temping" have theexplicit aim of facilitating the reintegration of unemployedinto the primary labour market. To achieve this, they employpreviously unemployed people and hire them out to otherfirms (borrowers) for a fee. While commercial lenders aregenerally not interested in losing good workers to theborrowers, the "non-profit temping" represents a newinstrument linking the labour lending activity with the aimof reintegration into the primary labour market. Ideally,the temp worker will be hired permanently by the customer ofthe temp agency (borrower) and thus reintegrated into theprimary labour market.

The analyses carried out in the project include aneconometric assessment of the effects of non-profittemporary employment agencies in Rhineland-Palatine onindividual labour market success. That is, the paper focuseson the question whether previously unemployed people, whowere employed by a non-profit temp agency, show a higherrate of reintegration into the primary labour market thanwithout "non-profit temping". It is based on data of theGerman Federal Employment Services made available from filesfor computer-assisted job brokering. Using thecomputer-assisted job brokering-data and econometricmatching methods, a control group of unemployed workers isselected that resembles the group of temporary workers interms of their socio-economic structure and labour markethistory.

The econometric comparison of the reintegration successreveals differences between temporary workers and controlgroup. In our observation window (up to 5 months afterleaving a temp agency), the reintegration success of tempworkers was significantly higher than that of the controlgroup. For example, two months after leaving the tempagencies, 27.4 % of the temp workers were employed in theprimary labour market, compared to only 11.3 % in thecontrol group of non-temps after the same period.Furthermore temp workers stay approx. 15 days longer in thelabour market within the first four months after leaving thetemp agency.

For a comprehensive evaluation of the programme in question,more extensive analyses would be required that shouldinclude other direct impacts (for example on earnings; onlonger term impacts; on participants´ reduced use of socialwelfare etc.), indirect impacts (for example, onnon-participants and through the forgone use of the moneyinvested) and the longer perspective of the non-profit tempagencies in the evaluation. This task, however, is closelyrelated to the need of better data.

Selected Publications

Monographs, Contributions to Edited Volumes

Almus, Matthias, Jürgen Egeln, M. Lechner, Friedhelm Pfeiffer and Hannes Spengler (1999), Wirkungen gemeinnützinger Arbeitnehmerüberlassungen in Rheinland-Pfalz, Beiträge zur Arbeitsmarkt- und Berufsforschung, LLL:citation.label.volume 225, Nürnberg.

Discussion and Working Papers

Lechner, M., Friedhelm Pfeiffer, Hannes Spengler and Matthias Almus (2000), The Impact of Non-profit Temping Agencies on Individual Labour Market Success in the West German State of Rhineland-Palatinate, ZEW Discussion Paper No. 00-02, Mannheim, LLL:citation.label.journal: Lechner, M. und F. Pfeiffer, Econometric Evaluation of Active Labour Market Policies, ZEW Economic Studies 13.. Download

Lechner, M., Friedhelm Pfeiffer, Hannes Spengler and Matthias Almus (1999), The Impact of Non-profit Temping Agencies on Individual Labour Market Success in the West German State of Rhineland-Palatinate, Lechner, M. und F. Pfeiffer, Econometric Evaluation of Active Labour Market Policies, ZEW Economic Studies 13. discussion paper 9902, Volkswirtschaftliche Abteilung, Universität St. Gallen, St. Gallen. Download

Almus, Matthias, Jürgen Egeln, M. Lechner, Friedhelm Pfeiffer and Hannes Spengler (1998), Die gemeinnützige Arbeitnehmerüberlassung in Rheinland-Pfalz - eine ökonometrische Analyse des Wiedereingliederungserfolgs, ZEW Discussion Paper No. 98-36, Mannheim, LLL:citation.label.journal: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung (MittAB) 31.. Download

Project duration

01.09.1996 - 30.09.1998

Contact
Project members

Jürgen Egeln (Coordinator)
PD Dr. Friedhelm Pfeiffer (Coordinator)
Dr. Matthias Almus
Prof. Dr. Michael Lechner
Prof. Dr. Hannes Spengler

Cooperation partner

Wolfgang Schwarz, Arbeitsamt Ludwigshafen, Ludwigshafen, DE