Partial Privatization and Yardstick Competition: Evidence from Employment Dynamics in Bangladesh
AbstractWe analyze the dynamics public and private sector employment, using the natural experiment provided by the partial privatization of the Bangladeshi jute industry. Although the public sector had substantial excess employment of workers initially, this excess was substantially eroded by the end of the period we study. The extent of such erosion differs between white-collar and manual worker categories, with excess employment persisting only in the former. Our findings are consistent with the idea that the central authorities used yardstick competition to reduce public sector managerial rents. We argue that partial privatization increases the efficacy of yardstick competition in the regulation of public firms, since heterogeneous ownership undermines collusion between public sector managers.
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Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 545.
Date of creation: 16 Sep 2002
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-09-28 (All new papers)
- NEP-MIC-2002-10-10 (Microeconomics)
- NEP-REG-2002-09-28 (Regulation)
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