What is the Cost of Privatization for Workers?
42 Pages Posted: 9 Mar 2018 Last revised: 11 Jan 2019
Date Written: December 1, 2018
The world is in the midst of a wave of privatization of state-owned enterprises. We examine how privatization affects workers and how firm-level employment relates to worker-level estimates. Using administrative data from Sweden, we show that following a privatization workers’ unemployment incidence increases by a fifth and their number of unemployment days by a quarter. Labor earnings and labor force participation remain unchanged. Despite increased transitions to unemployment, employment at the firm-level remains unchanged suggesting that firm-level estimates don’t proxy well for worker-level outcomes. These results shed light on the welfare costs of privatization and how they can be mitigated.
Keywords: Employment, privatization, state-owned enterprises (SOEs), unemployment
JEL Classification: F66, J24, J63, L33, M51
Suggested Citation: Suggested Citation