Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic

While privatization of state-owned enterprises has been one of the most important aspects of economic transition from a centrally planned to a market system, no transition economy has privatized all its firms simultaneously. This raises the issue of whether governments strategically privatize firms. In this paper we examine theoretically and empirically the determinants of the sequencing of privatization. First, we develop new and adapt existing theoretical models in order to obtain testable predictions about factors that may affect the sequencing of privatization. In doing so, we characterize potentially competing government objectives as (i) maximizing sales revenue from privatization or public goodwill from transferring shares of firms to voters, (ii) increasing economic efficiency, and (iii) reducing political costs due to layoffs. Next, we use an enterprise-level data set from the Czech Republic to test the competing theoretical predictions about which firm characteristics affect the sequencing of privatization. We find strong evidence that more profitable firms were sold first. This suggests that the government sequenced the sale of firms in a way that is consistent with our theories of sale revenue maximization and/or maximizing public goodwill from subsidized share transfers to citizens. Our results are also consistent with Shleifer and Vishny's (1994) prescription for increasing efficiency when there are political costs to employment losses caused by privatization. We also find that the Glaeser-Scheinkman (1996) recommendations for increasing efficiency by privatizing first firms subject to large informational shocks are consistent with our results. Finally, our findings are inconsistent with the government pursuing a static Pareto efficiency objective. In addition to enhancing the general understanding of privatization, our evidence suggests that many empirical studies of the effects of privatization on firm performance may suffer from selection bias since privatized firms are likely to have observable and unobservable characteristics that make them more profitable than firms that remain under state ownership.http://deepblue.lib.umich.edu/bitstream/2027.42/39707/3/wp323.pd

Estimating the Effect of Training on Employment and Unemployment Durations: Evidence From Experimental Data

Using data from a social experiment, we estimate the impact of training on the duration of employment and unemployment spells for AFDC recipients. Although an experimental design eliminates the need to construct a comparison group for this analysis, simple comparisons between the average durations or the transition rates of treatments' and controls' employment and unemployment spells lead to biased estimates of the effects of training. We present and implement several econometric approaches that demonstrate the importance of and correct for these biases. For the training program studied in the paper, we find that it raised employment rates because employment durations increased. In contrast, training did not lead to shorter unemployment spells.

Explosive Ballooning Flux Tubes in Tokamaks

Tokamak stability to, potentially explosive, `ballooning' displacements of elliptical magnetic flux tubes is examined in large aspect ratio equilibrium. Above a critical pressure gradient the energy stored in the plasma may be lowered by finite (but not infinitesimal) displacements of such tubes (metastability). Above a higher pressure gradient, the linear stability boundary, such tubes are linearly and nonlinearly unstable. The flux tube displacement can be of the order of the pressure gradient scale length. Plasma transport from displaced flux tubes may result in rapid loss of confinement.Comment: 4 pages, 6 figure

The crystal and molecular structure of 2,7-diazanaphthalene

X-ray diffraction data were collected at 20°C on a computer-controlled Philips diffractometer (PW 1100). The structure was solved by direct methods and refined by the full-matrix least-squares method to an R of 0.065 (weighted R 0.046). The molecule in the crystal is of lower symmetry than C2,.. The geometry of the molecule has been compared with NMR results obtained by Danieli, Lunazzi & Veracini [J. Chem. Soc. Perkin II, (1976), pp. 19-201. As a result a C-H bond-length correction of 0.09 (2) A was found

Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic

While privatization of state-owned enterprises has been one of the most important aspects of economic transition from a centrally planned to a market system, no transition economy has privatized all its firms simultaneously. This raises the issue of whether governments strategically privatize firms. In this paper we examine theoretically and empirically the determinants of the sequencing of privatization. First, we develop new and adapt existing theoretical models in order to obtain testable predictions about factors that may affect the sequencing of privatization. In doing so, we characterize potentially competing government objectives as (i) maximizing sales revenue from privatization or public goodwill from transferring shares of firms to voters, (ii) increasing economic efficiency, and (iii) reducing political costs due to layoffs. Next, we use an enterprise-level data set from the Czech Republic to test the competing theoretical predictions about which firm characteristics affect the sequencing of privatization. We find strong evidence that more profitable firms were sold first. This suggests that the government sequenced the sale of firms in a way that is consistent with our theories of sale revenue maximization and/or maximizing public goodwill from subsidized share transfers to citizens. Our results are also consistent with Shleifer and Vishny's (1994) prescription for increasing efficiency when there are political costs to employment losses caused by privatization. We also find that the Glaeser-Scheinkman (1996) recommendations for increasing efficiency by privatizing first firms subject to large informational shocks are consistent with our results. Finally, our findings are inconsistent with the government pursuing a static Pareto efficiency objective. In addition to enhancing the general understanding of privatization, our evidence suggests that many empirical studies of the effects of privatization on firm performance may suffer from selection bias since privatized firms are likely to have observable and unobservable characteristics that make them more profitable than firms that remain under state ownership.

The Effect of Medicaid Expansions for Low-Income Children on Medicaid Participation and Insurance Coverage: Evidence from the SIPP

Increased availability of public health insurance for children has led to two potentially contradictory concerns for public policy: that expanded availability of public insurance may lead families to decline private insurance and that additional public coverage may not reach many uninsured children. We examine these two concerns using data from the 1987-1993 Surveys of Income and Program Participation. Using static models we find that the expansions resulted in increased Medicaid coverage, although the estimates of take-up are smaller than estimates from previous research. We find little evidence of a negative relationship of any significant magnitude between eligibility for Medicaid and private coverage. We also find that children who have been eligible for Medicaid longer are more likely to be enrolled in Medicaid but no more likely to have lost private coverage. Including individual fixed effects reduces the magnitude of the estimated take-up effect, while the fixed effects estimates for the private insurance regression become negative and marginally statistically significant in some specifications. Simple dynamic models of insurance choice show that insurance choice is quite persistent. The estimated long run impact of eligibility in the dynamic models is larger than the estimate from the static models, while the immediate impact of expanded Medicaid eligibility from the dynamic models is smaller than the estimated effect from the static models.

Did Expanding Medicaid Affect Welfare Participation?

Using data from the 1988-1996 Current Population Surveys (CPS), we re-examine the evidence presented in Yelowitz (1995) showing that expansions in Medicaid eligibility for children were associated with increased labor force participation and reduced participation in Aid to Families with Dependent Children (AFDC) among single mothers. We find that Yelowitz's results were the result of two factors. First, he imposed a strong restriction on the parameter estimates that is not predicted by theory and is rejected in the CPS data. Second, he used only one of the two income tests that families must pass to be eligible for AFDC, resulting in higher imputed AFDC breakeven income levels for larger families. Once these problems are addressed, the Medicaid income limits have no significant effect on AFDC participation. The AFDC income limits, however, are significantly related to welfare and labor force participation in both his original sample and the entire 1988-1996 sample.