What is the Cost of Privatization for Workers?

42 Pages Posted: 9 Mar 2018 Last revised: 11 Jan 2019

See all articles by Martin Olsson

Martin Olsson

Research Institute of Industrial Economics (IFN)

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: December 1, 2018

Abstract

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

Olsson, Martin and Tåg, Joacim, What is the Cost of Privatization for Workers? (December 1, 2018). 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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