دانلود رایگان مقاله نابرابری دستمزد و رفاه در کشورهای در حال توسعه

Abstract

The impacts of privatization on wage inequality and welfare are considered for developing countries. In the short run, privatization can narrow wage inequality but reduce output of public firms. However, the favorable effect of privatization on lowering wage inequality vanishes in the long run due to the excessive entry of public firms. Thus, a policy recommendation for privatization would be: to avoid rising wage inequality, entry regulation of public firms should be imposed in the short run, and to mitigate the output contraction, complementary structural changes or policy reforms are needed in the transitional period of privatization.

5. Conclusions

Using an oligopolistic competition model for an open, dual developing economy with public firms in the urban sector, this paper has examined the impacts of privatization on wage inequality and social welfare for the short and the long run. In the short run, privatization can narrow wage inequality between skilled and skilled labor but reduce output of public firms. However, the favorable effect of privatization on lowering wage inequality vanishes or is reversed in the long run due to the excessive entry of public firms in the urban sector. Thus, a policy recommendation for privatization to improve a developing economy would be: to avoid rising wage inequality, entry regulation or closure of public firms should be imposed in the short run, and to mitigate the output contraction, complementary structural changes or policy reforms, like downsizing managerial services and increasing foreign capital or skilled labor, need to be combined to use during the transitional period of privatization for the developing economy. It should be noted that these results are obtained under the underlying assumption of homogenous products produced by domestic and foreign firms. This echoes the well-known excess entry outcome discussed in Mankiw and Whinston (1986) and Ghosh and Saha (2007). It would be of interest to examine whether the undesirable result of excess entry is still valid or not for the case of differentiated products.