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Impacts of privatization on employment: evidence from China

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  • Lingwen Huang
  • Yang Yao

Abstract

This paper evaluates the impact of privatization on firm employment using a panel dataset of 386 firms in China in the period 1995-2001. Our panel regressions find that employment drops more slowly in privatized firms than in pure state-owned firms by a margin of 17.7 percentage points over the base year of 1995. We also study the dynamic impacts of privatization on employment growth and find that the performance of privatized firms improves over time. Using the difference-in-difference propensity score matching method, we arrive at similar results. To test the robustness of our conclusions, we use alternative definitions of privatization and find that the impacts of privatization on employment are independent of the definition of privatization. These findings are robust even after we control other performance and financial variables as well as the pre-privatization employment history of privatized firms.

Suggested Citation

  • Lingwen Huang & Yang Yao, 2010. "Impacts of privatization on employment: evidence from China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 8(2), pages 133-156.
    • Handle: RePEc:taf:jocebs:v:8:y:2010:i:2:p:133-156
    DOI: 10.1080/14765281003750199
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    References listed on IDEAS

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    1. Bryson, Alex & Dorsett, Richard & Purdon, Susan, 2002. "The use of propensity score matching in the evaluation of active labour market policies," LSE Research Online Documents on Economics 4993, London School of Economics and Political Science, LSE Library.
    2. Beirne, John & Liu, Guy S. & Sun, Pei, 2013. "The performance impact of firm ownership transformation in China," Working Paper Series 1598, European Central Bank.
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    Cited by:

    1. Lu, Susan Feng & Dranove, David, 2013. "Profiting from gaizhi: Management buyouts during China’s privatization," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 634-650.
    2. Yang Yao, 2009. "The Disinterested Government: An Interpretation of China's Economic Success in the Reform Era," WIDER Working Paper Series RP2009-33, World Institute for Development Economic Research (UNU-WIDER).
    3. Ghulam, Yaseen & Jaffry, Shabbar, 2015. "Efficiency and productivity of the cement industry: Pakistani experience of deregulation and privatisation," Omega, Elsevier, vol. 54(C), pages 101-115.

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    More about this item

    Keywords

    privatization; employment; propensity score matching;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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