Insider Privatization and Careers - a Clinical Study of a Russian Firm in Transition

29 Pages Posted: 21 Jun 2005

See all articles by Guido Friebel

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Elena Panova

Toulouse School of Economics

Abstract

Transition provides an unexplored opportunity to study how changes in ownership affect structure and human resource policies of firms. We investigate a unique data set (17 years, 1500 white collar workers) of a Russian insider-privatized firm. In contrast to conventional beliefs about insider-privatized firms, there is much evidence for restructuring. However, the firm becomes "toploaded". There is massive hiring from the outside, in particular, for higher tiers in the hierarchy. As there is also less exit, in particular, from higher levels, previously existing career paths are blocked. This potentially distorts the incentives for investment in firm-specific human capital. We argue that weak property right enforcement may be the reason for our observations, and thus identify a novel channel through which institutions may affect firm efficiency.

Keywords: Internal labor markets, restructuring, personnel files

JEL Classification: M50, P31, J41

Suggested Citation

Friebel, Guido and Panova, Elena, Insider Privatization and Careers - a Clinical Study of a Russian Firm in Transition. Available at SSRN: https://ssrn.com/abstract=745245 or http://dx.doi.org/10.2139/ssrn.745245

Guido Friebel (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Elena Panova

Toulouse School of Economics ( email )

21 Allée de Brienne
Toulouse, 31000
France

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