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Workers' earnings in the UK before and after privatisation: a study of five industries

  • Orietta DESSY

    ()

  • Massimo FLORIO

    ()

In this paper we offer new evidence on the impact of British privatisations on wages in five selected industries: gas, electricity, water supply, railways and air transport. For the above sectors we construct long time-series of different measures of labour earnings, spanning from 1970 to 2002, taken from the ONS New Earnings Survey (NES). The use of an homogeneous source allows us to compare privatisation experiences quite different between each other. Mainstream privatisation theories suggest that under state ownership workers earn high wages because of unionisation and soft budget constraints, therefore privatisations should reduce wages for employees. We find instead that privatisation has permanent negative effects on real wages only in the gas industry. In the other sectors considered the change of ownership has only temporary effects, either of positive or of negative sign.

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Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2004-13.

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Date of creation: 01 Jan 2004
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Handle: RePEc:mil:wpdepa:2004-13
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  1. Natália Pimenta Monteiro, 2004. "Using propensity matching estimators to evaluate the impact of privatisation on wages," NIPE Working Papers 12/2004, NIPE - Universidade do Minho.
  2. Natália Pimenta Monteiro, 2004. "The impact of Privatisation on Wages: Evidence from the Portuguese Banking Industry," NIPE Working Papers 11/2004, NIPE - Universidade do Minho.
  3. Andrei Shleifer, 1998. "State Versus Private Ownership," Harvard Institute of Economic Research Working Papers 1841, Harvard - Institute of Economic Research.
  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.
  5. 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.
  6. Olivier Blanchard & Francesco Giavazzi, 2001. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," NBER Working Papers 8120, National Bureau of Economic Research, Inc.
  7. 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.
  8. Massimo Florio & Mara Grasseni, 2004. "The Missing Shock: The Macroeconomic Impact of British Privatisation," Working Papers 2004.104, Fondazione Eni Enrico Mattei.
  9. Massimo Florio, 2003. "Does privatisation matter? The long-term performance of British Telecom over 40 years," Fiscal Studies, Institute for Fiscal Studies, vol. 24(2), pages 197-234, June.
  10. De Fraja, Giovanni, 1993. "Unions and Wages in Public and Private Firms: A Game-Theoretic Analysis," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 457-69, July.
  11. Laszlo Goerke, 1998. "Privatization and efficiency wages," Journal of Economics, Springer, vol. 67(3), pages 243-264, October.
  12. Giacomo Corneo & Rafael Rob, . "Working in Public and Private Firms," Penn CARESS Working Papers 7942b6b570793de0891a05acb, Penn Economics Department.
  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.
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