The Employment Effects of Privatizing Public Utilities in OECD Countries

Abstract

This paper examines whether the privatization of network based utilities in developed countries leads to a retrenchment of the workforce. The panel regressions reveal, first, privatization does indeed lead to a reduction in the number of employees in the sectors concerned. Second, it is not typically the new investors themselves who implement the reduction. The downsizing takes place while the state is still the unique shareholder. Third, even though left-wing parties also implement privatization or at least not hamper, the results show that the displacement of workers is lower when left-wing parties dominate the cabinet.