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Full and Partial Privatization in China: The Labor Consequences

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  • Kevin Amess
  • Jun Du
  • Sourafel Girma

Abstract

This paper is the first paper to present findings evaluating the consequences for employees of full and partial privatization using difference-in-differences combined with propensity score matching. We find: (1) partial privatization causes job creation in contrast to full privatization, which destroys jobs, (2) full privatization causes higher labor productivity improvement than partial privatization, (3) wage increases occur only in partially privatized firms and (4) there are small increases in labor quality investment in both cases. The results suggest partial privatization exploits market discipline to induce labor productivity whilst simultaneously providing welfare improvements for labor. This is the ‘win-win’ outcome predicted by the ‘helping hand’ theory of government. Our results suggest that governments are likely to gain wider support for a program of partial privatization rather than full privatization.

Suggested Citation

  • Kevin Amess & Jun Du & Sourafel Girma, "undated". "Full and Partial Privatization in China: The Labor Consequences," Discussion Papers 09/11, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:09/11
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    File URL: http://www.nottingham.ac.uk/gep/documents/papers/2009/09-11.pdf
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    References listed on IDEAS

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    6. Jiahua Che & Yingyi Qian, "undated". "Insecure Property Rights and Government Ownership of Firms," Working Papers 97050, Stanford University, Department of Economics.
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    10. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    11. Bhaskar, V & Gupta, Bishnupriya & Khan, Mushtaq, 2002. "Partial Privatization and Yardstick Competition: Evidence from Employment Dynamics in Bangladesh," Economics Discussion Papers 8847, University of Essex, Department of Economics.
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    13. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
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    Cited by:

    1. Gao, Song, 2010. "Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China," MPRA Paper 24766, University Library of Munich, Germany.

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