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Manufacturing Plants' Use of Temporary Workers: An Analysis Using Census Microdata


  • The research in this paper was conducted while the authors were Special Sworn Status researchers of the U.S. Census Bureau at the Chicago Census Research Data Center. Views, research results, and conclusions expressed are those of the authors and do not necessarily reflect the views of the Census Bureau, the Federal Reserve Bank of Chicago, or the Federal Reserve System. This study has been screened to insure that no confidential data are revealed. Support for this research at the Chicago RDC from NSF (awards no. SES-0004335 and ITR-0427889) is also gratefully acknowledged. The authors thank the editor and two anonymous reviewers for their constructive comments. We also acknowledge the helpful comments and suggestions from David Autor, Susan Houseman, John Steven, and all the participants at the seminar at the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System, Keio University, Kyoto University, Hitotsubashi University, and Osaka University.JEL Classification: J2, J3


Using plant-level data from the plant capacity utilization survey, we explore how manufacturing plants' use of temporary workers is associated with the nature of their output fluctuations and other plant characteristics. We find that plants tend to use temporary workers when their output is expected to fall; this may indicate that firms use temporary workers to reduce costs associated with dismissing permanent employees. In addition, we find that plants whose future output levels are subject to greater uncertainty tend to use more temporary workers. We also examine the effects of wage and benefit levels for permanent workers, unionization rates, turnover rates, seasonal factors, and plant size and age on the use of temporary workers; based on our results, we discuss various views of why firms use temporary workers.