Employment and Wage Effects of Privatization: Evidence from Hungary, Romania, Russia and Ukraine

We use longitudinal methods and universal panel data on 30,000 initially state-owned manufacturing firms in four transition economies to estimate the impacts of privatisation on employment and wages. The results consistently reject job losses and never imply large wage cuts from either domestic or foreign privatisation. The domestic privatisation estimates are close to zero for employment; for wages, they are negative but small in magnitude. Estimated foreign privatisation effects are nearly always positive and sometimes large for both outcome variables. We interpret the employment and wage results in terms of underlying scale, productivity, and cost effects of privatisation.