The effect of private versus public ownership on labour earnings

• Author(s): Bastos, Paulo ; Monteiro, Natália ; Straume, Odd Rune
• Date: 2011
• Persistent ID: http://hdl.handle.net/1822/11997
• Origin: RepositóriUM - Universidade do Minho
• Subject(s): Privatisation; Wage formation; Trade unions
• Document Type: Research paper
• Language: English

Description

We examine the impact of privatisation on wage formation in unionised labour markets. Using longitudinal worker-firm data for Portugal spanning the period 1991-2007, we find that privatisation leads to higher wages, and show that this effect is driven by the fact that privatised firms tend to pay larger mark-ups on the union wage floor. These findings accord with a theoretical model in which actual paid wages are determined via sector-wide collective bargaining and firm-specific "fair-wage" policies, and where private ownership affects wage-setting incentives in both of these stages.