Working Paper No. 1201

What is the Cost of Privatization for Workers?

Published: March 5, 2018Pages: 30Keywords: Employment; Privatization; State-owned enterprises (SOEs); UnemploymentJEL-codes: F66; J24; J63; L33; M51

What is the Cost of Privatization for Workers? Martin Olsson and Joacim Tåg


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.

Martin Olsson

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Ph: +46 8 665 4500
Mob: +46 70 445 1296
martin.olsson@ifn.se

Joacim Tåg

Contact

Ph: +46 8 665 4524
joacim.tag@ifn.se

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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