Firm Ownership and Rent Sharing

In this paper we analyse—theoretically and empirically—how the degree of private versus public ownership of firms affects
the degree of rent sharing between firms and their workers. Using a particularly rich linked employer-employee dataset from
Portugal, covering a large number of corporate ownership changes across a wide spectrum of economic sectors over more than
20 years, we find that rent sharing is significantly higher in firms with a larger share of private ownership. Estimates from
our most preferred empirical specification suggest that an increase in the private ownership share of 10 percentage points
increases (on average) the rent-sharing elasticity by 0.0002. Based on a theoretical analysis that incorporates union-firm
wage bargaining and efficiency wage effects within the same modelling framework, this result cannot be explained by private
firms being more profit oriented than public ones. However, the result is consistent with a scenario whereby privatisation
leads to less job security for workers, implying stronger efficiency wage effects.