What is the Cost of Privatization for Workers?

31 Pages Posted: 9 Mar 2018  

Martin Olsson

Research Institute of Industrial Economics (IFN)

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: March 2018

Abstract

The world is in the midst of a new wave of privatization, with record dollar amounts raised in both developed and developing countries. Using rich Swedish registry data covering two decades from the mid-1990s, we show that privatizations increased unemployment incidence by almost a fifth, and duration by a quarter, relative to peers who remained employed by a state-owned enterprise. This led to almost one million extra days of unemployment for the workers affected. Wages and labor force participation remain unchanged. Furthermore, we show that privatizations have been costly for workers, and therefore for society, only if they took place during recessions. These results shed new 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? (March 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

Register to save articles to
your library

Register

Paper statistics

Downloads
17
Abstract Views
139
PlumX