Partial Privatization and Yardstick Competition: Evidence from Employment Dynamics in Bangladesh

19 Pages Posted: 29 Jun 2006

See all articles by V. Bhaskar

V. Bhaskar

University College London

Bishnupriya Gupta

University of Warwick - Department of Economics

Mushtaq Khan

University of London - School of Oriental and African Studies (SOAS)

Abstract

We analyse the dynamics of public and private sector employment in Bangladesh, using the natural experiment provided by the partial privatization of the jute industry. The public sector had substantial excess employment of workers initially, but this excess was substantially eroded by the end of the period we studied. The extent of erosion differs between white-collar and manual worker categories, with excess employment persisting only in the former. Our findings suggest that partial privatization increases the efficacy of yardstick competition in the regulation of public firms, because heterogeneous ownership undermines collusion between public sector managers, and also makes excess employment more transparent to the general public.

Suggested Citation

Bhaskar, V. and Gupta, Bishnupriya and Khan, Mushtaq, Partial Privatization and Yardstick Competition: Evidence from Employment Dynamics in Bangladesh. Economics of Transition, Vol. 14, No. 3, pp. 459-477, July 2006, Available at SSRN: https://ssrn.com/abstract=912804 or http://dx.doi.org/10.1111/j.1468-0351.2006.00265.x

V. Bhaskar

University College London ( email )

Gower Street
London
United Kingdom

Bishnupriya Gupta

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Mushtaq Khan

University of London - School of Oriental and African Studies (SOAS) ( email )

Thornhaugh Street
Russell Square: College Buildings 541
London, WC1H 0XG
United Kingdom

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