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Privatized Firms, Rule of Law and Labor Outcomes in Emerging Markets

  • Alberto Chong


  • Gianmarco León

This paper takes advantage of a recent large firm-level dataset to compare labor indicators of privatized, private, and public firms around the world, particularly wages, benefits, labor composition, education and training, unionization, and quality of management. While labor productivity increases after privatization, the ratio of permanent workers to temporary workers also increases. Convergence depends to some degree on the quality of the institutions, namely, the rule of law. Not only is this true for the ratio of permanent workers to temporary workers, but also for education of the workforce, and for the manager’s years of experience. On the other hand, the rule of law appears to be less important in the case of labor productivity and training.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4524.

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Date of creation: Jun 2007
Date of revision:
Handle: RePEc:idb:wpaper:4524
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  1. J. David Brown & John S. Earle & Vladimir Vakhitov, 2006. "Wages, Layoffs, and Privatization: Evidence from Ukraine," Upjohn Working Papers and Journal Articles 06-126, W.E. Upjohn Institute for Employment Research.
  2. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
  3. Bruce C. Fallick, 1996. "A review of the recent empirical literature on displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
  4. Rafael La Porta & Florencio López-de-Silanes, 1997. "The Benefits of Privatization : Evidence from Mexico," World Bank Other Operational Studies 11583, The World Bank.
  5. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  6. Jonathan HASKEL & Stefan SZYMANSKI, 1992. "A Bargaining Theory Of Privatisation," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 63(2), pages 207-227, 04.
  7. Chong, Alberto & Guillen, Jorge & López-de-Silanes, Florencio, 2011. "Privatization and labor policies," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1119-1130, October.
  8. Monteiro, Natalia Pimenta, 2003. "The Impact of Privatisation on Wages: Evidence from the Portugese Banking Industry," Royal Economic Society Annual Conference 2003 156, Royal Economic Society.
  9. Sebastián Galiani and Federico Sturzenegger, . "The Impact of Privatization on the Earnings of Restructured Workers," Business School Working Papers longterm, Universidad Torcuato Di Tella.
  10. Rama,Martin G., 1997. "Efficient public sector downsizing," Policy Research Working Paper Series 1840, The World Bank.
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