The effect of private versus public ownership on labour earnings

Bastos, Paulo; Monteiro, Natália P.; Straume, Odd Rune

doi:10.1093/oep/gpu017

Cited by 7 publications

(9 citation statements)

References 42 publications

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“…The optimal employment level chosen by the firm is implicitly given by: 17 We assume here for simplicity that the wage level is exogenously given. However, the ownership effects on employment would be qualitatively similar if we endogenize wages by assuming that they are decided in bargaining between the firm and a trade union, as in Monteiro et al (2011), or that they are a result of firm-specific 'fair wage' policies, as in Bastos et al (2011). Empirical results from additional regressions (not reported but available upon request) show that our findings hold when controlling for wages.…”

Section: Appendix A: Definition Of Skill Groupsmentioning

confidence: 72%

“…where x :¼ w e and x :¼ w e are the effective wage and reference wage levels, respectively. 18 As in Monteiro et al (2011) and Bastos et al (2011), we assume that private ownership has potentially two different effects (relative to public ownership): (i) stronger profit orientation and (ii) higher worker effort.…”

Section: Appendix A: Definition Of Skill Groupsmentioning

confidence: 99%

“…(), or that they are a result of firm‐specific ‘fair wage’ policies, as in Bastos et al . (). Empirical results from additional regressions (not reported but available upon request) show that our findings hold when controlling for wages.…”

mentioning

confidence: 97%

“…See Bastos et al . () for a more thorough discussion of this mechanism with references to empirical evidence.…”

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confidence: 99%

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The impact of private vs. public ownership on the level and structure of employment

2014

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We examine the effects of private vs. public ownership on the level and structure of employment using uncommonly rich data on the population of Portuguese firms from 1991 to 2009. We find that private ownership is associated with sizeable job losses. This occurs whether we consider privatizations or nationalizations, and the relationship tends to be stronger in the presence of foreign capital. We also find some evidence that private ownership is associated with higher skill utilization, particularly following privatizations and when foreign investment is present. The estimated job losses associated with private ownership are consistent with a theory in which the shift in ownership increases the degree of profit orientation and leads to lower job security.JEL classifications: C23, D21, J45.

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Section: Appendix A: Definition Of Skill Groupsmentioning

confidence: 72%

Section: Appendix A: Definition Of Skill Groupsmentioning

confidence: 99%

mentioning

confidence: 97%

“…See Bastos et al . () for a more thorough discussion of this mechanism with references to empirical evidence.…”

mentioning

confidence: 99%

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The impact of private vs. public ownership on the level and structure of employment

2014

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“…For instance, a study using a five-year panel of personnel records of a single large Swiss public sector telecommunication company shows that privatization resulted in an average wage decrease as well as increased wage inequality after the introduction of a private sector wage scale [7]. Two other studies of around 300 privatizations in Portugal find positive wage and negative employment effects [8], [9]. Following workers employed in 339 privatized firms in Sweden, another study provides evidence that privatization has no effect on wages, while it leads to an increase in the incidence and duration of unemployment.…”

Section: The Effect Of Privatization On Employment and Wagesmentioning

confidence: 99%

Impact of privatization on employment and earnings

Earle¹,

Shpak²

2019

izawol

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Until recently, employment and wage effects of privatization received little attention in empirical research. None of the conducted studies show large negative effects on either employment or wages. Recent research in transition economies using much larger panel data that enable use of more appropriate evaluation methods confirms this finding and also reports systematically better outcomes for workers under foreign than domestic privatization. The policy implications are potentially profound. Despite the likely performance benefits, policymakers may be reluctant to privatize because of fears of job losses and wage cuts. The findings that average employment and wage losses tend to be low and that effects are sometimes positive should alleviate those fears. ELEVATOR PITCH Conventional wisdom and prevailing economic theory hold that the new owners of a privatized firm will cut jobs and wages. But this ignores the possibility that new owners will expand the firm's scale, with potentially positive effects on employment, wages, and productivity. Evidence generally shows these forces to be offsetting, usually resulting in small employment and earnings effects and sometimes in large, positive effects on productivity and scale. Foreign ownership usually has positive effects, and the effects of domestic privatization tend to be larger in countries with a more competitive business environment. KEY FINDINGS Cons Budget constraints are not infinitely soft, so stateowned firms have some incentives to economize. Negative consequences for employment and earnings are larger where state-owned firms are most protected, regulated, and subject to planning. The business environment and intensity of competition matter regardless of ownership. Limited evidence suggests that wage and employment losses are greatest for low-skilled workers.

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The Unequal Distribution of Consequences of Contracting Out: Female, Low-skilled, and Young Workers Pay the Highest Price

Hansen

Bel

Petersen

2022

Journal of Public Administration Research and Theory

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While the public and private labor markets are marked by significant differences in the institutions of wage formation, very few studies have examined workers’ wages and employment in the public and private sectors when solving the same tasks. Focusing on government contracting out, we examine the change in work income, employment, and government income benefits when public workers are transferred from a public to a private employer due to contracting out. Drawing on theories on wage gaps between the public and private sectors and the property rights literature, we develop novel hypotheses about how individual characteristics of workers moderate the impact of contracting out on workers. Using high-quality individual-level Danish register data, we establish a worker treatment group who experienced contracting out and match them with a similar group of public workers who did not. Difference-in-difference estimation with Coarsened Exact Matching suggests that workers overall experience a significant decline in work income and employment, albeit with major intergroup differences across gender, skills, and age. Our sub-group findings show that female, low-skilled, and younger workers pay the highest price for government contracting out, both in terms of salaries and employment. We discuss how economic theories of public‒private gaps in wage setting can be combined with public administration theories of contract design and monitoring to develop improved — and possibly more equitable — conditions for workers when governments contract out.

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The effect of private versus public ownership on labour earnings

Cited by 7 publications

References 42 publications

The impact of private vs. public ownership on the level and structure of employment

The impact of private vs. public ownership on the level and structure of employment

Impact of privatization on employment and earnings

The Unequal Distribution of Consequences of Contracting Out: Female, Low-skilled, and Young Workers Pay the Highest Price

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