Privatization and Income Inequality: Mapping the Process and Establishing the Link

• In Event: 2451 - Section on Organizations, Occupations, and Work Refereed Roundtables (1 hour)
  In Refereed Roundtable 60min: Table 8. Income Disparities

Abstract

This research examines the effect of U.S. employment privatization on earnings. Prior work on privatization has mostly focused on industry case studies. Instead, this paper presents an analysis of wages across the entire U.S. economy. Using a quantile regression analysis of Current Population Survey and Bureau of Economic Analysis data for years 2002-2016, findings indicate that industry-level employment privatization has different effects for individuals throughout the income distribution. Net of other factors, higher levels of privatization are associated with benefits to workers in the top income decile in 2016, but this effect varies across time. When privatization benefits workers in lower income quantiles, higher earners are always the first to benefit. These findings indicate that, aside from having an impact on public services, privatization has been a driver of income inequality in the United States. Relative to other Western democracies, the United States has a history of low levels of nationalized industrial assets. For this reason, mapping privatization on a national scale has been fairly difficult, as the sale of government assets is not a hallmark feature of U.S. privatization as it is elsewhere. For this reason, I map the defining characteristics of privatization before exploring its overall impact on workers in various points in the wage distribution.

Author

• Nathan Meyers, University of Massachusetts Amherst