Do Changes in Regulation Affect Employment Duration in Temporary Work Agencies? CES Germany & Europe Working Papers, No. 07.1, 2007

Over the past three decades Germany has repeatedly deregulated the law on temporary agency work by stepwise increasing the maximum period for hiring-out employees and allowing temporary work agencies to conclude fixed-term contracts. These reforms should have had an effect on employment duration within temporary work agencies. Based on an informative administrative data set we use a mixed proportional hazard rate model to examine whether employment duration has changed in response to these reforms. We find that the repeated prolongation of the maximum period for hiring-out employees significantly increased average employment duration while the authorization of fixed-term contracts reduced employment tenure.