Policy and Job Quality: The Effects of State Unemployment Insurance Taxes and Workers' Compensation Insurance on Temporary Help Services Employment Concentration

Abstract

A state and year fixed effects model is developed to analyze the influence of state unemployment insurance taxes and state workers' compensation costs on temporary help services employment concentration. Using state level panel data from the Bureau of Labor Statistics' Quarterly Census of Employment and Wages, state unemployment insurance tax factors are found to have significant effects on temporary help services employment concentration. Workers' compensation costs had a significant effect on temporary help services employment concentration during the Great Recession, but not before. Because temporary help services jobs represent low quality jobs relative to traditional direct-hire jobs, state unemployment insurance taxes, through their impact on temporary help services employment concentration, contribute to a decrease in job quality. The results of the analysis suggest that the effects of policy factors on job quality merit further analysis.