The Impact of Privatisation on Wages: Evidence from the Portugese Banking Industry

Abstract

This paper adopts a difference-in-differences estimator to examine the impact of privatisation on wages in the Portuguese banking industry for the period 1989-97. The design of the reform and the nature of dataset employed (matched employer-employee) provided a particularly important opportunity to analyse the effects of privatisation on different demographic groups, using multiple control groups, and considering the timing of the effects. The empirical evidence suggests a U-shaped relationship between wage variation and time period of restructuring, regardless of the choice of the comparison group, for those employees, either men or women, retained by privatised firms.privatisation, wages, Portugese banking industry, difference-in-difference