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Full and Partial Privatization in China: The Labor Consequences

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  • Kevin Amess
  • Jun Du
  • Sourafel Girma

Abstract

This paper is the first paper to present findings evaluating the consequences for employees of full and partial privatization using difference-in-differences combined with propensity score matching. We find: (1) partial privatization causes job creation in contrast to full privatization, which destroys jobs, (2) full privatization causes higher labor productivity improvement than partial privatization, (3) wage increases occur only in partially privatized firms and (4) there are small increases in labor quality investment in both cases. The results suggest partial privatization exploits market discipline to induce labor productivity whilst simultaneously providing welfare improvements for labor. This is the ‘win-win’ outcome predicted by the ‘helping hand’ theory of government. Our results suggest that governments are likely to gain wider support for a program of partial privatization rather than full privatization.

Suggested Citation

  • Kevin Amess & Jun Du & Sourafel Girma, 2009. "Full and Partial Privatization in China: The Labor Consequences," Discussion Papers 09/11, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:09/11
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    References listed on IDEAS

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    Cited by:

    1. Gao, Song, 2010. "Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China," MPRA Paper 24766, University Library of Munich, Germany.
    2. Jun Du & Xiaoxuan Liu, 2015. "Selection, Staging and Sequencing in the Recent Chinese Privatization," Journal of Law and Economics, University of Chicago Press, vol. 58(3).

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