Low-Income and Low-Skilled Workers Involvement in Nonstandard Employment. Setting Up the Analysis

10/01/2001

The research task is to describe the effect of temporary work on at-risk disadvantaged workers. Three key issues are of interest here. The first is to define the counterfactual; the second is, for each counterfactual, to develop a comparison group of workers possessing a set of characteristics as close as possible to the characteristics of those workers who have experienced temporary employment; and the third is to describe the differences in outcomes for the treatment and comparison groups.

Since defining the counterfactual and developing a comparison group are critical to the analysis, we briefly discuss the approach here, and provide detailed discussion in Appendix B. The effect of entering into temporary help employment is clearly conditioned on the state from which the worker entered: whether the worker was employed or not employed to start with. Thus, we define two separate groups of workers: those who enter temporary help employment from traditional employment, and those who enter temporary help employment from nonemployment. We then need to construct a comparison group--and it is also clear that there are two possible counterfactuals. One alternative to temporary work is traditional employment; the other is not having a job at all. Thus two sets of comparison groups need to be constructed--each of which, again, will be conditioned on the initial state. So the first "treatment" group--individuals who went into temporary work from traditional employment--will be compared to two possible counterfactuals--individuals who went from traditional employment to nonemployment and those who went from traditional employment to traditional employment. The second "treatment" group--individuals who went into temporary work from nonemployment--will be compared to two different possible counterfactuals--individuals who went from nonemployment to nonemployment and those who went from nonemployment to traditional employment.

Defining the comparison group is also an important component of answering the research question. Here we use not only baseline demographic characteristics, but we also exploit the richness of the SIPP data to construct employment histories. We use matched propensity score techniques to "match" individuals in each treatment and comparison group as closely as possible.

Clearly, the analysis of the results is quite complex. First, since for at-risk workers, often the alternative to temporary help work is no employment at all, we provide results for four sets of counterfactuals: those who have jobs, and those who are not employed--conditional on two sets of initial employment states. Second, since the validity of the results is critically dependent on the quality of the matching procedure, and one reason to use SIPP was the availability of a rich employment history, we provide a detailed discussion of the quality of the match for each of these four comparison groups. This discussion is reported in Appendix B for reasons of brevity. Third, since there are multiple ways to define the effect of temporary work, we use several outcome measures for a year later--ranging from public assistance receipt, to employment and earnings. Finally, since the focus of analysis is on disadvantaged workers, we provide results for both the full sample of workers, and workers within 200 percent of poverty in the initial period.(56)