TY - JOUR

T1 - Do public ownership and lack of competition matter for wages and employment? Evidence from personnel records of a privatized firm

AU - Melly, Blaise

AU - Puhani, Patrick A.

PY - 2013/8/1

Y1 - 2013/8/1

N2 - Do public sector firm ownership and lack of competition matter for wages and employment? To address this question, we consider a large public-sector company that is privatized. Using personnel records, we find employment contract liberalization to generate relative wage losses for older, high-tenure, low-skilled, part-time workers, permanent residents, and women. Employment reductions mostly affect the same groups experiencing a wage decline. Overall, wage liberalization leads to an increase in wage inequality of between 6% and 9%, which-if applied to the whole public sector-would lead to a 52% to 76% closure of the "inequality gap" between the private and public sectors in Europe. Our results suggest that differences between public- and private-sector wage structures found in descriptive studies are to a large extent causal rather than the result of selection into these sectors and that public sector employment and career path regulations limit a firm's ability to maintain a competitive workforce.

AB - Do public sector firm ownership and lack of competition matter for wages and employment? To address this question, we consider a large public-sector company that is privatized. Using personnel records, we find employment contract liberalization to generate relative wage losses for older, high-tenure, low-skilled, part-time workers, permanent residents, and women. Employment reductions mostly affect the same groups experiencing a wage decline. Overall, wage liberalization leads to an increase in wage inequality of between 6% and 9%, which-if applied to the whole public sector-would lead to a 52% to 76% closure of the "inequality gap" between the private and public sectors in Europe. Our results suggest that differences between public- and private-sector wage structures found in descriptive studies are to a large extent causal rather than the result of selection into these sectors and that public sector employment and career path regulations limit a firm's ability to maintain a competitive workforce.

UR - http://www.scopus.com/inward/record.url?scp=84880725318&partnerID=8YFLogxK

U2 - 10.1111/jeea.12024

DO - 10.1111/jeea.12024

M3 - Article

AN - SCOPUS:84880725318

VL - 11

SP - 918

EP - 944

JO - Journal of the European Economic Association

JF - Journal of the European Economic Association

SN - 1542-4766

IS - 4

ER -