Working Paper No. 1201

What is the Cost of Privatization for Workers?

Published: March 5, 2018, revised January 2019 and February 2021Pages: 54Keywords: Employment; Entrepreneurship; Family; Health; Labor; Privatization; State-owned enterprises (SOEs); Unemployment; WagesJEL-codes: G34; J24; J63; L33; M51

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

Using rich administrative data on Swedish firms and workers covering two decades, we study how the privatization of state-owned enterprises affects the careers and welfare of workers. Consistent with the effects of an initial reorganization of the workforce, wage income declines and unemployment increases. These effects are stronger for workers protected by state ownership. We do not find negative spillovers of privatization on family and health outcomes. We also demonstrate that privatization encourages workers to enter entrepreneurship. The firm-level productivity gains from privatization are approximately five times larger than the incumbent worker-level costs due to lost wage income.

Reference:
Olsson, Martin and Joacim Tåg (2018). "What Is the Cost of Privatization for Workers?". IFN Working Paper No. 1201. Stockholm: Research Institute of Industrial Economics (IFN).

Martin Olsson

Contact

Ph: +46 8 665 4500
martin.olsson@ifn.se

Joacim Tåg

Contact

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

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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