Pedro Trivin (University of Eastern Piedmont)
Ferran Elias and Jose Silva
We study a 1999 Spanish reform that extended collective bargaining coverage by requiring temporary agency workers to be paid according to user-firm agreements. Using administrative data and quasi-experimental variation, we estimate a coverage premium: agency wages rose by about 15%, with additional spillovers to in-house workers. Agency employment declined, but this was more than offset by increases in in-house and permanent jobs, yielding positive total employment effects. Agencies passed all labor-cost increases to user firms. The results suggest that the reform reallocated rents toward workers and reduced monopsonistic distortions, indicating effciency gains alongside redistribution.