Public Ownership and the Local Economy
65 Pages Posted: 14 Sep 2017 Last revised: 30 Aug 2018
Date Written: August 27, 2018
We find that a firm’s transition from private to public ownership stunts local economic growth, especially in poorer areas. After accounting for the endogenous decision to go public, areas hosting companies that go public experience muted growth in employment, establishments, population, and wages, relative to areas where firms file to go public and remain private. Establishment level analyses reveal that transitioning to public ownership causes firms to geographically diversify their establishments and employee base. These findings are consistent with public ownership reducing a firm’s reliance on local agglomeration economies, to the detriment of the local community.
Keywords: IPO, Economic Growth
JEL Classification: G38, J61, J21, G30, G32
Suggested Citation: Suggested Citation