The Benefits Of Privatization: Evidence From Mexico
AbstractCritics of privatization argue that the increased profitability of privatized companies comes at the expense of society. Using data from 97 percent of those nonfinancial firms privatized in Mexico during the period 1983-1991, we study two channels for social losses: (1) increased prices, and (2) layoffs and lower wages. Privatization is followed by a 24-percentage-point increase in the mean ratio of operating income to sales as firms catch up with industry-matched control groups. We estimate that higher product prices explain 5 percent of that increase; transfers from laid-off workers, 31 percent; and productivity gains, the remainder. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
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Bibliographic InfoArticle provided by MIT Press in its journal The Quarterly Journal of Economics.
Volume (Year): 114 (1999)
Issue (Month): 4 (November)
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Other versions of this item:
- Rafael La Porta & Florencio López-de-Silanes, 1997. "The Benefits of Privatization : Evidence from Mexico," World Bank Other Operational Studies 11583, The World Bank.
- Rafael La Porta & Florencio Lopez-de-Silane, 1997. "The Benefits of Privatization: Evidence from Mexico," NBER Working Papers 6215, National Bureau of Economic Research, Inc.
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