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Wages, Layoffs, and Privatization: Evidence from Ukraine

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Author Info
J. David Brown (Heriot-Watt University and CEU Labor Project)
John S. Earle () (W.E. Upjohn Institute for Employment Research and Central European University)
Vladimir Vakhitov (University of Kentucky and Kyiv-Mohyla School of Economics)

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Abstract

This paper estimates the effects of privatization on worker separations and wages using retrospective data from a national probability sample of Ukrainian households. Detailed worker characteristics are used to control for compositional differences and to assess types of observable "winners" and "losers" from privatization. Preprivatization worker-firm matches are used to control for unobservables in worker and firm selection. The results imply that privatization reduces wages by 5 percent and cuts the layoff probability in half. Outside investor ownership reduces separations but leaves wages unaffected. Winners from privatization tend to be higher skilled employees of larger firms, but there is no discernable relationship with gender, education, or experience.

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Publisher Info
Paper provided by W.E. Upjohn Institute for Employment Research in its series Staff Working Papers with number 06-126.

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Date of creation: Feb 2006
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Handle: RePEc:upj:weupjo:06-126

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Related research
Keywords: privatization; layoffs; wages; Ukraine;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out
P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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References listed on IDEAS
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  1. Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June. [Downloadable!] (restricted)
    Other versions:
  2. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July. [Downloadable!] (restricted)
  3. J. David Brown & John S. Earle & Almos Telegdy, 2005. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Staff Working Papers 05-121, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
    Other versions:
  4. Rafael La Porta & Florencio López-De-Silanes, 1999. "The Benefits Of Privatization: Evidence From Mexico," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1193-1242, November. [Downloadable!] (restricted)
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  5. Jones, Derek C. & Ilayperuma Simon, Kosali, 2005. "Wage determination under plan and early transition: Bulgarian evidence using matched employer-employee data," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 227-243, June. [Downloadable!] (restricted)
  6. John S. Earle & Klara Z. Sabirianova, 2002. "How Late to Pay? Understanding Wage Arrears in Russia," Staff Working Papers 02-77, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
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  7. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March. [Downloadable!] (restricted)
  8. Elizabeth Brainerd, 2000. "Women in transition: Changes in gender wage differentials in Eastern Europe and the former Soviet Union," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 54(1), pages 138-162, October.
  9. J. David Brown & John S. Earle, 2002. "The Reallocation of Workers and Jobs in Russian Industry: New Evidence on Measures and Determinants," William Davidson Institute Working Papers Series 490, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  10. Djankov, Simeon & Murrell, Peter, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," CEPR Discussion Papers 3319, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Gorodnichenko, Yuriy & Peter, Klara Sabirianova, 2004. "Returns to Schooling in Russia and Ukraine: A Semiparametric Approach to Cross-Country Comparative Analysis," IZA Discussion Papers 1325, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  12. Philippe Aghion & Olivier J. Blanchard, 1998. "On privatization methods in Eastern Europe and their implications," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 87-99, 05. [Downloadable!] (restricted)
  13. Haskel, Jonathan & Szymanski, Stefan, 1993. "Privatization, Liberalization, Wages and Employment: Theory and Evidence for the UK," Economica, London School of Economics and Political Science, vol. 60(238), pages 161-81, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alberto Chong & Gianmarco León, 2007. "Empresas privatizadas, instituciones y consecuencias laborales en paises emergentes," RES Working Papers 4525, Inter-American Development Bank, Research Department. [Downloadable!]
  2. Alberto Chong & Gianmarco León, 2007. "Privatized Firms, Rule of Law and Labor Outcomes in Emerging Markets," RES Working Papers 4524, Inter-American Development Bank, Research Department. [Downloadable!]
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