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The impact of private vs. public ownership on the level and structure of employment

Authors


  • We thank two anonymous referees for very helpful comments and suggestions. We are also grateful to Ministério do Trabalho e da Solidariedade Social for allowing access to data from Quadros de Pessoal. Financial support was provided by the Portuguese Foundation for Science and Technology (under the grant PTDC/EGE-ECO/102914/2008) through the ‘Programa Operacional Temático Factores de Competitividade (COMPETE)’ of the ‘Quadro Comunitário de Apoio III’, which is partially funded by FEDER. The views expressed herein are solely those of the authors and not necessarily those of the World Bank.

Abstract

We examine the effects of private vs. public ownership on the level and structure of employment using uncommonly rich data on the population of Portuguese firms from 1991 to 2009. We find that private ownership is associated with sizeable job losses. This occurs whether we consider privatizations or nationalizations, and the relationship tends to be stronger in the presence of foreign capital. We also find some evidence that private ownership is associated with higher skill utilization, particularly following privatizations and when foreign investment is present. The estimated job losses associated with private ownership are consistent with a theory in which the shift in ownership increases the degree of profit orientation and leads to lower job security.

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