What is the Cost of Privatization for Workers?

54 Pages Posted: 9 Mar 2018 Last revised: 12 Feb 2021

See all articles by Martin Olsson

Martin Olsson

Research Institute of Industrial Economics (IFN)

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: February 12, 2021

Abstract

Using rich administrative data on Swedish firms and workers covering two decades, we study how the privatization of state-owned enterprises affects the careers and welfare of workers. Consistent with the effects of an initial reorganization of the workforce, wage income declines and unemployment increases. These effects are stronger for workers protected by state ownership. We do not find negative spillovers of privatization on family and health outcomes. We also demonstrate that privatization encourages workers to enter entrepreneurship. The firm-level productivity gains from privatization are approximately five times larger than the incumbent worker-level costs due to lost wage income.

Keywords: Employment, entrepreneurship, family, health, labor, privatization, state-owned enterprises (SOEs), unemployment, wages.

JEL Classification: G34, J24, J63, L26, L33, M51.

Suggested Citation

Olsson, Martin and Tåg, Joacim, What is the Cost of Privatization for Workers? (February 12, 2021). IFN Working Paper No. 1201, Available at SSRN: https://ssrn.com/abstract=3134462 or http://dx.doi.org/10.2139/ssrn.3134462

Martin Olsson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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