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Firm Ownership and Rent Sharing

  • Monteiro, Natália Pimenta


    (University of Minho)

  • Portela, Miguel


    (University of Minho)

  • Straume, Odd Rune


    (University of Minho)

We analyse – theoretically and empirically – how private versus public ownership of firms affects the degree of rent sharing between firms and their workers. Using a particularly rich linked employer-employee dataset from Portugal, covering a large number of corporate ownership changes across a wide spectrum of economic sectors over more than 20 years, we find a positive relationship between private ownership and rent sharing. Based on our theoretical analysis, this result cannot be explained by private firms being more profit oriented than public ones. However, the result is consistent with privatisation leading to less job security, implying stronger efficiency wage effects.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4909.

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Length: 40 pages
Date of creation: Apr 2010
Date of revision:
Publication status: published in: Journal of Labor Research, 2011, 32 (3), 210 - 236
Handle: RePEc:iza:izadps:dp4909
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  1. Heyman, Fredrik & Sjöholm, Fredrik & Gustavsson Tingvall, Patrik, 2004. "Is there Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data," Working Paper Series 199, Trade Union Institute for Economic Research.
  2. Natália P. Monteiro & Miguel Portela & Odd Rune Straume, 2010. "Firm ownership and rent sharing," NIPE Working Papers 13/2010, NIPE - Universidade do Minho.
  3. Carneiro, Anabela & Portugal, Pedro, 2006. "Market Power, Dismissal Threat and Rent Sharing: The Role of Insider and Outsider Forces in Wage Bargaining," IZA Discussion Papers 2102, Institute for the Study of Labor (IZA).
  4. Arai, Mahmood, 1999. "Wages, Profits and Capital Intensity: Evidence from Matched Worker-Firm Data," Research Papers in Economics 1999:3, Stockholm University, Department of Economics.
  5. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, vol. 11(2), pages 165-189, April.
  6. Junichiro Ishida & Noriaki Matsushima, 2008. "Should civil servants be restricted in wage bargaining? A mixed-duopoly approach," Discussion Papers 2008-49, Kobe University, Graduate School of Business Administration.
  7. David Card & Francesco Devicienti & Agata Maida, 2014. "Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 84-111.
  8. Haskel, Jonathan & Sanchis, Amparo, 1995. "Privatisation and X-Inefficiency: A Bargaining Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 43(3), pages 301-21, September.
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  15. John W. Budd & Jozef Konings & Matthew J. Slaughter, 2005. "Wages and International Rent Sharing in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 73-84, February.
  16. David Margolis & Kjell G, Salvanes, 2001. "Do Firms Really Share Rents with their Workers," Working Papers 2001-16, Centre de Recherche en Economie et Statistique.
  17. Grosfeld, Irena & Nivet, Jean-Francois, 1999. "Insider power and wage setting in transition: Evidence from a panel of large Polish firms, 1988-1994," European Economic Review, Elsevier, vol. 43(4-6), pages 1137-1147, April.
  18. Mumford, Karen & Dowrick, Steve, 1994. "Wage Bargaining with Endogenous Profits, Overtime Working and Heterogeneous Labor," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 329-36, May.
  19. Natália Pimenta Monteiro & Miguel Portela, 2007. "Rent-sharing in Portuguese Banking," NIPE Working Papers 18/2007, NIPE - Universidade do Minho.
  20. 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.
  21. Laszlo Goerke, 1998. "Privatization and efficiency wages," Journal of Economics, Springer, vol. 67(3), pages 243-264, October.
  22. CREMER, Helmuth & MARCHAND, Maurice & THISSE, Jacques-François, . "Mixed oligopoly with differentiated products," CORE Discussion Papers RP 930, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  26. Schmidt, Klaus M., 1996. "The costs and benefits of privatization: An incomplete contracts approach," Munich Reprints in Economics 19773, University of Munich, Department of Economics.
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