Insider Privatization and Careers - A Clinical Study of a Russian Firm in Transition
Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
Toulouse School of Economics
Transition provides an unexplored opportunity to study how changes in ownership affect structure and human resource policies of firms. We investigate a unique data set (17 years, 1500 white collar workers) of a Russian insider-privatized firm. In contrast to conventional beliefs about insider-privatized firms, there is much evidence for restructuring. However, the firm becomes "toploaded". There is massive hiring from the outside, in particular, for higher tiers in the hierarchy. As there is also less exit, in particular, from higher levels, previously existing career paths are blocked. This potentially distorts the incentives for investment in firm-specific human capital. We argue that weak property right enforcement may be the reason for our observations, and thus identify a novel channel through which institutions may affect firm efficiency.
Number of Pages in PDF File: 29
Keywords: Internal labor markets, restructuring, personnel files
JEL Classification: M50, P31, J41working papers series
Date posted: June 21, 2005
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