Temporary help services (THS) offer firms an additional option for flexible adjustment of employment levels. In addition, THS can facilitate new employment for both labor market entrants and job losers. This survey examines the economic significance, the changing regulatory framework, and the recent development of the THS sector in Germany. Declining wages and rising employment shares in THS are suggestive of a safety valve for the primary labor market, especially for unskilled workers. High markups charged by THS firms despite declining relative compensation of THS workers suggest a high shadow price for this form of labor input.
Among economic journals, this publication has a “bridging” function, as it features content written by economists for researchers in the field and for non-specialists, including professionals with a background in economics who want to keep up to date with the latest research.