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Does Privatization Hurt Workers? Lessons from Comprehensive Manufacturing Firm Panel Data in Hungary, Romania, Russia and Ukraine

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  • J. David Brown
  • John S. Earle
  • Álmos Telegdy

    ()
    (Institute of Economics, Hungarian Academy of Sciences)

Abstract

We analyze the effects of privatization on firm-level wages and employment in four transition economies. Contrary to workers' fears, our fixed effect and random trend estimates imply little effect of domestic privatization, except for a slight negative effect in Russia, and they provide some evidence of positive foreign effects on both wages and employment in all four countries. The negligible employment impact of domestic privatization results from effects on efficiency and scale that are large, positive, but offsetting in Hungary and Romania, and from small effects of both types in Russia and Ukraine. The positive employment and wage bill consequences of foreign ownership result from a substantial scale-expansion effect that dominates the efficiency effect.

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Bibliographic Info

Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series Budapest Working Papers on the Labour Market with number 0510.

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Date of creation: 12 Jan 2006
Date of revision: 12 Jan 2006
Publication status: Published in Journal of Political Economy, vol. 114, no. 1.
Handle: RePEc:has:bworkp:0510

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Keywords: privatization; employment; wages; foreign ownership; Hungary; Romania; Russia; Ukraine;

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References

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  1. John S. Earle & Almos Telegdy, . "Privatization Methods and Productivity Effects in Romanian Industrial Enterprises," Upjohn Working Papers and Journal Articles jse20024, W.E. Upjohn Institute for Employment Research.
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Citations

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Cited by:
  1. Earle, John S. & Telegdy, Álmos, 2007. "Ownership and Wages: Estimating Public-Private and Foreign-Domestic Differentials Using LEED from Hungary, 1986–2003," IZA Discussion Papers 3125, Institute for the Study of Labor (IZA).
  2. Robert E. Lipsey, 2006. "Measuring the Impacts of FDI in Central and Eastern Europe," NBER Working Papers 12808, National Bureau of Economic Research, Inc.
  3. John S. Earle & Almos Telegdy, 2007. "Ownership and Wages: Estimating Public-Private and Foreign-Domestic Differentials with LEED from Hungary, 1986–2003," Upjohn Working Papers and Journal Articles 07-134, W.E. Upjohn Institute for Employment Research.
  4. Gimpelson, V. & Kapeliushnikov, R. & Lukyanova, A. & Ryzhikova, Z. & Kulyaeva, G., 2010. "Ownership and Wage Differentiation in Russia," Journal of the New Economic Association, New Economic Association, issue 5, pages 48-72.
  5. Gene Chang & Josef Brada, 2011. "A Model of the Macroeconomic Effects of Privatization on Employment in Transition and Developing Countries with an Application to China," Transition Studies Review, Springer, vol. 18(2), pages 310-327, December.
  6. Sándor Csengödi & Dieter M. Urban, 2008. "Foreign Takeovers and Wage Dispersion in Hungary," CESifo Working Paper Series 2188, CESifo Group Munich.

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