1 Department of Economics, Aarhus School of Business, Aarhus BSS, Aarhus University2 Centre for Research in Integration, Education, Qualifications and Marginalization (CIM), Aarhus School of Business, Aarhus BSS, Aarhus University3 Department of Economics and Business Economics, Aarhus BSS, Aarhus University4 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
As a consequence of the rapid growth of temporary agency employment in Germa-ny the debate on the remuneration of temporary agency workers has intensified recently. The study finds that the temp wage gap in Germany is indeed large. Decomposition reveals that the gap is mainly driven by differences in personal characteristics. Temps already suffer from a marked wage decline before entering the temporary help sector. Nevertheless, temporary help employment does not leave a long-lasting scar. After leaving the sector, workers no longer suffer from a wage penalty. A recent reform set a high incentive for temporary help agencies to pay their workers according to a collective agreement. Surprisingly, the unionization of the sector could not bring the widening wage gap to a halt.