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What is the Cost of Privatization for Workers?

Author

Listed:
  • Olsson, Martin

    (Research Institute of Industrial Economics (IFN))

  • Tåg, Joacim

    (Research Institute of Industrial Economics (IFN))

Abstract

The world is in the midst of a new wave of privatization, with record dollar amounts raised in both developed and developing countries. Using rich Swedish registry data covering two decades from the mid-1990s, we show that privatizations increased unemployment incidence by almost a fifth, and duration by a quarter, relative to peers who remained employed by a state-owned enterprise. This led to almost one million extra days of unemployment for the workers affected. Wages and labor force participation remain unchanged. Furthermore, we show that privatizations have been costly for workers, and therefore for society, only if they took place during recessions. These results shed new light on the welfare costs of privatization and how they can be mitigated.

Suggested Citation

  • Olsson, Martin & Tåg, Joacim, 2018. "What is the Cost of Privatization for Workers?," Working Paper Series 1201, Research Institute of Industrial Economics, revised 15 Jan 2019.
    • Handle: RePEc:hhs:iuiwop:1201
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    Cited by:

    1. David Arnold, 2019. "The Impact of Privatization of State-Owned Enterprises on Workers," Working Papers 625, Princeton University, Department of Economics, Industrial Relations Section..

    More about this item

    Keywords

    Employment; Privatization; State-owned enterprises (SOEs); Unemployment;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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