While privatization of state-owned enterprises (SOEs) remains a popular policy tool in many countries, the impacts on workers are unclear. This paper studies the case of Brazil, which implemented a large privatization program in the 1990s. Following privatization, incumbent workers in privatized SOEs suffer a wage decline of roughly 25 percent relative to a matched control group. Additionally, private sector firms that are connected to privatized SOEs by labor mobility also reduce wages. A summary calculation suggests that privatization decreased the formal sector wage by 3 percent, with about two-thirds of this effect due to the indirect impact on private sector workers.
"The Impact of Privatization of State-Owned Enterprises on Workers."
American Economic Journal: Applied Economics,
Wage Level and Structure; Wage Differentials
Job, Occupational, and Intergenerational Mobility; Promotion
Public Enterprises; Public-Private Enterprises
Comparison of Public and Private Enterprises and Nonprofit Institutions; Privatization; Contracting Out
Industrialization; Manufacturing and Service Industries; Choice of Technology
Economic Development: Human Resources; Human Development; Income Distribution; Migration