Incumbent employees’ resistance to implementing privatization policy

Political Selection of Firms Into Privatization Programs. Evidence From Romanian Comprehensive Data

“…Megginson (2005), for example, notes that "all governments fear lay-offs resulting privatization" (p. 389). The reluctance to privatize firms with high chances of employment or wage declines can be exacerbated by incumbent employees' reactions, who may resist privatization if they fear losing their job (Druk Gal and Yaari, 2006). This fear need not be realistic -it is enough if workers expect this to be the result of privatization (Lipton and Sachs, 1990).…”

“…These suggest that despite the lack of hard evidence on the negative employment and wage effects of privatization, loss of jobs and wages was a serious concern of politicians and it is likely to have shaped privatization policies. The reluctance to privatize firms with high chances of employment or wage declines can be exacerbated by incumbent employees' reactions, who may resist privatization for fear of losing of their jobs (Druk-Gal and Yaari, 2006). This fear need not be realistic -it is enough if workers expect this to be the result of privatization (Lipton and Sachs, 1990).…”

Employment and Wage Effects of Privatization: Evidence from Hungary, Romania, Russia, and Ukraine

“…López-de-Silanes, Shleifer, and Vishny (1997, p. 53) argue that public sector employees expect privatization "will lead to lower wages and loss of employment." Druk-Gal and Yaari (2006) provide examples of employee opposition from Costa Rica, Egypt, Nicaragua, and Panama. Concerning policymakers, Megginson (2005, p. 389) writes that "all governments fear lay-offs resulting from privatization," and Kay and Thompson (1986, p. 19) note that a possible goal of privatization could be "disciplining the power of public sector trade unions."…”

Bribes and Bureaucracy Size: The Strategy of Watering Down Corruption

“…7 7 The assumption of revenue maximization is quite standard in the literature. See, for example, Besley and McLaren (1993), Druk‐Gal and Yaari (2006), Wadho (2016) and Strîmbu and González (2018). In our case, from a technical point of view, a welfare‐maximizing government would introduce the complication that the wage of public officials in the ‘no bribe’ policy could assume any (sustainable) value equal to or above the reservation level. …”