Internal and external effects of privatization in industry

Abstract

A modified labor productivity Junction is applied to measure effects of privatization. We put forward the hypothesis that the interna! effect of privatization is increase in the elasticity oftabor productivity with respect to capital/tabor ratio. The external effect of privatization is growth in the total factor productivity being a function of a lagged share of privatized labor in industry as a whole. Data on Polish manufacturing and mining industriesform the sample. Estimation implicates a growth of tabor productivity up to 64% as an effect of interna! privatization process and up to 132% as an effect of external privatization process.