- Title
- The Impact of Privatization of State-Owned Enterprises on Workers
- Author(s)
- David Arnold David Arnold (Princeton University)
- Abstract
- I study the impact of privatization of state-owned enterprises (SOEs) on workers at privatized SOEs and on the aggregate labor market. Using a matched employer-employee dataset, I find privatization in Brazil between 1996-2000 lowered incumbent workers’ wages by a substantial 30 log points relative to a matched control group. Half of this decline is due to privatized workers facing an increased risk of displacement and moving to lower-paying establishments, while half is due to within-establishment wage changes. The direct impacts understate the total cost of privatization to workers in the presence of general equilibrium spillovers. To estimate spillovers on private-sector labor markets, I construct an exposure to privatization measure that depends on the transition probability between jobs in a given labor market and jobs in privatized SOEs. I find wages decline in labor markets that are more exposed to privatization relative to those that are less exposed. A summary calculation suggests that privatization decreased the aggregate wage in the formal sector of the Brazilian labor market by 4.5 log points, with about one-quarter of this effect attributable to the direct effect on privatized workers and three-quarters attributable to spillovers.
- Creation Date
- 2019-02
- Section URL ID
- IRS
- Paper Number
- 625
- URL
- https://dataspace.princeton.edu/bitstream/88435/dsp01wd376007f/3/625.pdf
- File Function
- Jel
- J21, J31, J45
- Keyword(s)
- privatization, spillovers, labor markets, state-owned enterprises (SOEs)
- Suppress
- false
- Series
- 1