Wage Determination: Privatised, New Private and State Owned Companies. Empirical Evidence from Panel Data

Abstract

This paper examines the determinants of wage pressure in large companies, including ownership characteristics and the impact of regional labour markets. By using a panel of 329 Polish largest firms during the period 1997-2001, we find evidence of rent sharing activities, however there is also asymmetry in quasi rent elasticity of wages. The wage setting mechanism seems to differ between new private companies, privatised companies, state firms and mixed ownership. In particular, wages in state firms are highly responsive to regional labour market conditions, while firms in other sectors are not. Rent sharing is visible in both the state sector and new private companies, yet several specific characteristics differ. On the other hand, quasi rent elasticity appears to be suppressed in privatised companies.

Keywords: wages, quasi-rents, de novo firms, privatisation, unemployment

JEL Classification: C23, D21, J21, L33, P31