Temporary Employment in Markets with Frictions

Temporary employment has spiked in OECD countries over the last 40 years and is now a common feature of their labor market landscape. A large body of empirical literature examines the spread of temporary employment, but no systematic review and interpretation of its findings in light of economic theory exists. This survey aims at filling this gap by interpreting the key empirical results based on the predictions of the macro models in markets with frictions developed to address specific features of temporary employment. Revisions of workhorse models used so far to analyze temporary employment are also suggested. (JEL J22, J31, J41, J81, J83, K31)