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J Labor Res (2011) 32:210236 DOI 10.1007/s12122-011-9109-6
Firm Ownership and Rent Sharing
Natlia Pimenta Monteiro Miguel Portela
Odd Rune Straume
Published online: 12 May 2011 Springer Science+Business Media, LLC 2011
Abstract In this paper we analysetheoretically and empiricallyhow the degree of private versus public ownership of firms affects the degree of rent sharing between firms and their workers. Using a particularly rich linked employer-employee dataset from Portugal, covering a large number of corporate ownership changes across a wide spectrum of economic sectors over more than 20 years, we find that rent sharing is significantly higher in firms with a larger share of private ownership. Estimates from our most preferred empirical specification suggest that an increase in the private ownership share of 10 percentage points increases (on average) the rent-sharing elasticity by0.0002. Based on a theoretical analysis that incorporates union-firm wage bargaining and efficiency wage effects within the same modelling framework, this result cannot be explained by private firms being more profit oriented than public ones. However, the result is consistent with a scenario whereby
N. P. Monteiro M. Portela O. R. Straume (B)
Department of Economics and NIPE, University of Minho, Campus de Gualtar, Braga, 4710-057, Portugale-mail: [email protected]
N. P. Monteiroe-mail: [email protected]
M. Portelae-mail: [email protected]
M. PortelaIZA Bonn, Bonn, Germany
O. R. StraumeHEB, Department of Economics, University of Bergen, Bergen, Norway
J Labor Res (2011) 32:210236 211
privatisation leads to less job security for workers, implying stronger efficiency wage effects.
Keywords Rent sharing Private vs public ownership Panel data
JEL Classification J45 D21 C23
Introduction
Rent sharing between firms and their workers is a widely documented feature of labour markets in many countries (e.g., Mumford and Dowrick 1994; Blanchflower et al. 1996; Black and Strahan 2001; Arai 2003; Estevo and Tevlin 2003; Budd et al. 2005; Gertzgen 2009). Still, the understanding of which characteristics of firms and workers that contribute to the size and extent of such rent sharing is still not fully developed. The present paper explores the effect of an hitherto rather neglected explanatory variable of rent sharing, namely corporate ownership. More precisely, we analysetheoretically and empiricallyhow the degree of private versus public ownership of firms affects the level of rent sharing.1
To our knowledge, there exists little or no documented theoretical understanding...