Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35042 
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers No. 3688
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We use longitudinal methods and universal panel data on 30,000 initially state-owned manufacturing firms in four transition economies to estimate the impacts of privatization on employment and wages. The results in all four countries consistently reject job losses and they never imply large wage cuts from privatization to either foreign or domestic owners. The domestic privatization estimates are close to zero for employment, while for wages they are negative but small in magnitude; estimated foreign privatization effects are nearly always positive and sometimes large for both outcome variables. We find that the negligible consequences of domestic privatization result from effects on scale, productivity, and costs that are large but offsetting in Hungary and Romania, and from small effects of all types in Russia and Ukraine. The positive employment outcome of foreign ownership results from a substantial scale-expansion effect that dominates the productivity-improvement effect, and the positive wage outcome from productivity improvement dominating the cost-reduction effect.
Subjects: 
Privatization
employment
wages
foreign ownership
Hungary
Romania
Russia
Ukraine
JEL: 
D21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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