Do Changes in Regulation Affect Temporary Agency Workers’ Job Satisfaction?

This paper evaluates how a reform relaxing regulations of the temporary help service sector in Germany affected job satisfaction of male temporary agency workers. We isolate the causal effect of this reform by combining a difference‐in‐difference and matching approach using rich survey data. We find that the regulatory change substantially decreased agency workers’ job satisfaction while leaving regular workers’ job satisfaction unchanged. Further analysis reveals that the negative effect on agency workers’ job satisfaction can be attributed to a decrease in wages and an increase in perceived job insecurity. These results are robust to the use of different specifications and placebo tests.