Social Costs of Mass Privatization

David Stuckler and Lawrence P. King ()

No wp890, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan Stephen M. Ross Business School

Abstract: According to leading economic theorists, creating capitalism out of communism requires rapid privatization. In this article we empirically test the welfare implications of privatization policies in Post-Soviet countries by using cross-national panel mortality data as an indicator of social costs. We find that rapid privatization – whether measured by a novel measure of mass privatization program implementation or Enterprise Bank for Reconstruction and Development privatization outcome scores – is a critical determinant of life expectancy losses, and that when privatization policies are reversed, life expectancy improves. Using selection models, we show that endogeneity understates the social costs of rapid privatization.

Keywords: privatization; postcommunist; mortality crisis (search for similar items in EconPapers)
JEL-codes: I12 J18 L33 P36 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-tra
Date: 2007-09-01
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