Privatization and Labor Force Restructuring around the World
Some critics of privatization argue that poor labor force restructuring is a key concern and that governments should establish better retrenchment programs. Using new data from a sample of 400 companies in the world, Chong and López-de-Silanes test...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2002/09/2018944/privatization-labor-force-restructuring-around-world http://hdl.handle.net/10986/19280 |
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okr-10986-192802021-04-23T14:03:42Z Privatization and Labor Force Restructuring around the World Chong, Alberto López-de-Silanes, Florencio ACCOUNTING ADVERSE SELECTION ASSETS ASYMMETRIC INFORMATION BANK PRIVATIZATION CENTRAL BANK DEVELOPED COUNTRIES ECONOMIC SECTORS EMPLOYMENT FINANCIAL INFORMATION FISCAL DEFICITS FISH INFLATION LABOR FORCE LAWS NET SALES POLICY RESEARCH PRESENT VALUE PRIVATIZATION PUBLIC POLICY RETIREMENT STRUCTURAL ADJUSTMENT TAX ADMINISTRATION TRANSITION ECONOMIES UNEMPLOYMENT LABOR FORCE POPULATION DOWNSIZING REDUCTION IN FORCE PRIVATIZATION OF PUBLIC ENTERPRISES SOCIAL SAFETY NETS REDUNDANCY TARGETING ADVERSE SELECTION Some critics of privatization argue that poor labor force restructuring is a key concern and that governments should establish better retrenchment programs. Using new data from a sample of 400 companies in the world, Chong and López-de-Silanes test competing theories about the wisdom of retrenchment programs and their effect on prices paid by buyers, and rehiring policies by private owners after privatization. The results show that adverse selection plagues retrenchment programs carried out by governments before privatization. Controlling for endogeneity, several labor retrenchment policies yield a negative impact on net privatization prices. In confirmation of the adverse selection argument, various types of voluntary downsizing lead to a higher frequency of rehiring of the same workers by the new private owners. Compulsory skill-based programs are the only type of program that is marginally associated with higher prices and lower rehiring rates after privatization, but the political and economic costs of this policy may make it somewhat impractical. While a qualified non-intervention policy appears to be the safest bet in labor retrenchment before privatization, another one might be to set up a social safety net or labor reallocation program before privatization, and then let the new private owners decide who is redundant and who is not. Setting up the program before privatization may help with the political viability of the process and letting the new owners manage the retrenchment may help avoid adverse selection. 2014-08-11T17:00:09Z 2014-08-11T17:00:09Z 2002-09 http://documents.worldbank.org/curated/en/2002/09/2018944/privatization-labor-force-restructuring-around-world http://hdl.handle.net/10986/19280 English en_US Policy Research Working Paper;No. 2884 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ADVERSE SELECTION ASSETS ASYMMETRIC INFORMATION BANK PRIVATIZATION CENTRAL BANK DEVELOPED COUNTRIES ECONOMIC SECTORS EMPLOYMENT FINANCIAL INFORMATION FISCAL DEFICITS FISH INFLATION LABOR FORCE LAWS NET SALES POLICY RESEARCH PRESENT VALUE PRIVATIZATION PUBLIC POLICY RETIREMENT STRUCTURAL ADJUSTMENT TAX ADMINISTRATION TRANSITION ECONOMIES UNEMPLOYMENT LABOR FORCE POPULATION DOWNSIZING REDUCTION IN FORCE PRIVATIZATION OF PUBLIC ENTERPRISES SOCIAL SAFETY NETS REDUNDANCY TARGETING ADVERSE SELECTION |
| spellingShingle |
ACCOUNTING ADVERSE SELECTION ASSETS ASYMMETRIC INFORMATION BANK PRIVATIZATION CENTRAL BANK DEVELOPED COUNTRIES ECONOMIC SECTORS EMPLOYMENT FINANCIAL INFORMATION FISCAL DEFICITS FISH INFLATION LABOR FORCE LAWS NET SALES POLICY RESEARCH PRESENT VALUE PRIVATIZATION PUBLIC POLICY RETIREMENT STRUCTURAL ADJUSTMENT TAX ADMINISTRATION TRANSITION ECONOMIES UNEMPLOYMENT LABOR FORCE POPULATION DOWNSIZING REDUCTION IN FORCE PRIVATIZATION OF PUBLIC ENTERPRISES SOCIAL SAFETY NETS REDUNDANCY TARGETING ADVERSE SELECTION Chong, Alberto López-de-Silanes, Florencio Privatization and Labor Force Restructuring around the World |
| relation |
Policy Research Working Paper;No. 2884 |
| description |
Some critics of privatization argue that
poor labor force restructuring is a key concern and that
governments should establish better retrenchment programs.
Using new data from a sample of 400 companies in the world,
Chong and López-de-Silanes test competing theories about the
wisdom of retrenchment programs and their effect on prices
paid by buyers, and rehiring policies by private owners
after privatization. The results show that adverse selection
plagues retrenchment programs carried out by governments
before privatization. Controlling for endogeneity, several
labor retrenchment policies yield a negative impact on net
privatization prices. In confirmation of the adverse
selection argument, various types of voluntary downsizing
lead to a higher frequency of rehiring of the same workers
by the new private owners. Compulsory skill-based programs
are the only type of program that is marginally associated
with higher prices and lower rehiring rates after
privatization, but the political and economic costs of this
policy may make it somewhat impractical. While a qualified
non-intervention policy appears to be the safest bet in
labor retrenchment before privatization, another one might
be to set up a social safety net or labor reallocation
program before privatization, and then let the new private
owners decide who is redundant and who is not. Setting up
the program before privatization may help with the political
viability of the process and letting the new owners manage
the retrenchment may help avoid adverse selection. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Chong, Alberto López-de-Silanes, Florencio |
| author_facet |
Chong, Alberto López-de-Silanes, Florencio |
| author_sort |
Chong, Alberto |
| title |
Privatization and Labor Force Restructuring around the World |
| title_short |
Privatization and Labor Force Restructuring around the World |
| title_full |
Privatization and Labor Force Restructuring around the World |
| title_fullStr |
Privatization and Labor Force Restructuring around the World |
| title_full_unstemmed |
Privatization and Labor Force Restructuring around the World |
| title_sort |
privatization and labor force restructuring around the world |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2002/09/2018944/privatization-labor-force-restructuring-around-world http://hdl.handle.net/10986/19280 |
| _version_ |
1764439672450187264 |