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Wages, Layoffs, and privatization: Evidence from Ukraine

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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. Pre-privatization 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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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number jse20064.

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Handle: RePEc:upj:weupjo:jse20064

Note: Appears in Journal of Comparative Economics 34(2): 272-294
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Keywords: wages; layoffs; privatization; transition economies; ukraine;

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References

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  1. Roman Frydman & Cheryl Gray & Marek Hessel & Andrzej Rapaczynski, 1999. "When Does Privatization Work? The Impact Of Private Ownership On Corporate Performance In The Transition Economies," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1153-1191, November.
  2. John S. Earle & J. David Brown, 2002. "The Reallocation of Workers and Jobs in Russian Industry: New Evidence on Measures and Determinants," Upjohn Working Papers and Journal Articles 02-83, W.E. Upjohn Institute for Employment Research.
  3. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March.
  4. Belton M. Fleisher & Klara Sabirianova Peter & Xiaojun Wang, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," William Davidson Institute Working Papers Series 2004-703, William Davidson Institute at the University of Michigan.
  5. J. David Brown & John S. Earle & Almos Telegdy, 2005. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Upjohn Working Papers and Journal Articles 05-121, W.E. Upjohn Institute for Employment Research.
  6. 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.
  7. 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).
  8. Brainerd, Elizabeth, 2002. "Five Years after: The Impact of Mass Privatization on Wages in Russia, 1993-1998," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 160-190, March.
  9. John S. Earle & Klara Z. Sabirianova, 2002. "How Late to Pay? Understanding Wage Arrears in Russia," Upjohn Working Papers and Journal Articles 02-77, W.E. Upjohn Institute for Employment Research.
  10. 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.
  11. Djankov, Simeon & Murrell, Peter, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," CEPR Discussion Papers 3319, C.E.P.R. Discussion Papers.
  12. 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.
  13. 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, Cornell University, ILR School, vol. 54(1), pages 138-162, October.
  14. Munich, Daniel & Svejnar, Jan & Terrell, Katherine, 2005. "Is women's human capital valued more by markets than by planners?," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 278-299, June.
  15. 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.
  16. 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.
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Cited by:
  1. Adelaide Figueiredo & Fernanda Figueiredo & Natália P. Monteiro & Odd Rune Straume, 2010. "Restructuring in privatised firms:a Statis approach," NIPE Working Papers 16/2010, NIPE - Universidade do Minho.
  2. Lehmann, Hartmut & Muravyev, Alexander & Zimmermann, Klaus F., 2012. "The Ukrainian Longitudinal Monitoring Survey: Towards a Better Understanding of Labor Markets in Transition," IZA Discussion Papers 7090, Institute for the Study of Labor (IZA).
  3. Natalia Danzer, 2013. "Job Satisfaction and Self-Selection into the Public or Private Sector: Evidence from a Natural Experiment," Ifo Working Paper Series Ifo Working Paper No. 169, Ifo Institute for Economic Research at the University of Munich.
  4. Alberto Chong & Gianmarco León, 2007. "Privatized Firms, Rule of Law and Labor Outcomes in Emerging Markets," Research Department Publications 4524, Inter-American Development Bank, Research Department.
  5. Alberto Chong & Gianmarco León, 2007. "Empresas privatizadas, instituciones y consecuencias laborales en paises emergentes," Research Department Publications 4525, Inter-American Development Bank, Research Department.
  6. Mathur, Ike & Banchuenvijit, Wanrapee, 2007. "The effects of privatization on the performance of newly privatized firms in emerging markets," Emerging Markets Review, Elsevier, vol. 8(2), pages 134-146, May.

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