Abstract

Temporary-help jobs offer rapid entry into paid employment, but they are typically brief and it is unknown whether they foster longer-term employment. We utilize the unique structure of Detroit’s welfare-to-work program to identify the effect of temporary-help jobs on labor market advancement. Exploiting the rotational assignment of welfare clients to numerous nonprofit contractors with differing job placement rates, we find that temporary-help job placements do not improve and may diminish subsequent earnings and employment outcomes among participants. In contrast, job placements with direct-hire employers substantially raise earnings and employment over a seven quarter follow-up period. JEL: J24, J48, J62 Keywords: Temporary-help, welfare to work, job placement, low-skill workers, causal effects. Temporary-help firms employ a disproportionate share of low-skilled and minority U.S. workers (U.S. Department of Labor, Bureau of Labor Statistics 2005). Within the low-wage population, employment in temporary help is especially prevalent among participants in public employment and training programs. Although the temporary-help industry accounts for less than 3 percent of average daily employment in the United States, state administrative data show that

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