Working Paper No. 1201

What is the Cost of Privatization for Workers?

Published: March 5, 2018, revised January 2019Pages: 43Keywords: Employment; Privatization; State-owned enterprises (SOEs); UnemploymentJEL-codes: 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 wave of privatization of state-owned enterprises. We examine how privatization affects workers and how firm-level employment relates to worker-level estimates. Using administrative data from Sweden, we show that following a privatization workers’ unemployment incidence increases by a fifth and their number of unemployment days by a quarter. Labor earnings and labor force participation remain unchanged. Despite increased transitions to unemployment, employment at the firm-level remains unchanged suggesting that firm-level estimates don’t proxy well for worker-level outcomes. These results shed light on the welfare costs of privatization and how they can be mitigated.

Martin Olsson

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martin.olsson@ifn.se

Joacim Tåg

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joacim.tag@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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