Restructuring of State-Owned Enterprises and Workers: Evidence from East Germany

Moritz Hennicke

No jext7, OSF Preprints from Center for Open Science

Abstract: I study the impact on workers of restructuring communist firms during the transition to capitalism. Drawing on close to the universe of communist state-owned enterprises under the authority of the German privatization agency in the 1990ies, I am able to link firms across industries and districts to workers and their labor market outcomes before and after exposure to firm restructuring. I study effects of two treatments: First, I find that the advent of market competition through firm closures by the privatization agency increases unemployment. Second, I estimate that the genesis of private ownership in the form of privatizations lowers household income and well-being of workers. To explore the role of ownership, I conduct event studies at the firm level and find that privatized firms downsize compared to firms remaining state-owned. Building a conceptual framework on the idea that the transition implied large temporary uncertainties, the shrinking of privatized firms might have followed from a higher desire by private owners to reduce exposure to risk as opposed to the state.

Date: 2023-04-27
New Economics Papers: this item is included in nep-com and nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:jext7

DOI: 10.31219/osf.io/jext7

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