Who Wants To Revise Privatization? The Complementarity of Market Skills and Institutions

Abstract

U sing survey data from 28 transition countries, we test for the complementarity and substitutability of market-relevant skills and institutions. We show that democracy and good governance complement market skills in transition economies. Under autocracy and weak governance institutions, there is no significant difference in support for revising privatization between high-and low-skilled respondents. As the level of democracy and the quality of governance increases, the difference in the level of support for revising privatization between the high and low skilled grows dramatically. This finding contributes to our understanding of microfoundations of the politics of economic reform.

The Productivity Consequences of Political Turnover: Firm-Level Evidence from Ukraine's Orange Revolution

“…The threat was credible, given the overwhelming majority of Ukrainians who were in favor of revising privatization (Åslund, 2009, pp. 206-207; see also Denisova et al, 2009). In the end, only two previously privatized enterprises were seized by authorities, but the perceived threat to property rights has been blamed for the collapse in GDP growth that followed the Orange Revolution (Åslund, 2005 As discussed in the previous section, events such as these can have various effects on firm performance, some of which may be distributional in nature.…”

In Public Education Expenditures We Trust: Does Trust Increase Support for Public Education Expenditures?

“…Unfortunately, it is impossible to rule out the possibility of the endogenity problem due to the lack of a valid instrumental variable. As in other papers (Aghion et al, 2010;Denisova et al, 2009;Dimitrova-Grajzl et al, 2012;Grosjean, 2011;Grosjean et al, 2013;Grosjean & Senik, 2011) that use this data set, we do our best to mitigate the endogenetiy problem without being able to use a valid instrumental variable. Therefore, we must state that our results should be taken with caution.…”

Institutions and the support for market reforms

“…Indeed, individuals with negative experiences of transition-related hardships, such as those who faced wage cuts or wage arrears, or had to sell assets or cut down on basic food consumption, were challenging the reforms more frequently than those with no such negative experiences [1].…”

“…The study of attitudes toward privatization in 28 transition countries highlights the role of relevant market skills for the post-reform economy as being another key determinant for the support of reforms [1]. Market-relevant skills are defined as entrepreneurial skills or high (senior professional) skills utilized by the market economy, e.g.…”

“…Earning a salary in senior professional occupations diminishes opposition to privatization by 4.1 percentage points, on average. Being an entrepreneur decreases the probability of an individual demanding the revision of privatization policies by 5.1 percentage points [1].…”