Mixed Ownership, Unemployment, and Welfare for a Developing Economy

This paper considers the employment and welfare effects of mixed ownership via partial privatization of state-owned enterprises for a developing economy. An increase in the private ownership lowers the production and, hence, worsens urban unemployment in the short run. However, in the long run, capital moves to the rural region, alleviating the problem of urban unemployment. The employment effect can have a positive contribution to social welfare in the long run. Copyright © 2006 The Authors; Journal compilation © 2006 Blackwell Publishing Ltd.