However, while the investment and labor productivity growth performance differentials between SOEs and POEs also remained similar across sectors, the same cannot be said about job and wage growths differentials between SOEs and POEs (Figure 8(b)). SOEs drove the overall employment growth differentials in partially contestable and natural monopoly sectors. Similarly, although SOEs in natural monopoly sectors experienced higher wage growth, the overall lower wage growth effect was driven by the lower wage growth experienced by SOEs in competitive sectors.

Figure 8: Performance of BOS Relative to POEs by Sector, 2011-2019 <!-- Start of picture text --> (a) Log) of ...... (b) Growth of ......<br>3.5 *** 0.09 ***<br>3.0 *** 0.08 ***<br>*** *** 0.07<br>2.5 *** 0.06 *** ***<br>2.0 ** 0.05 ***<br>1.5 0.04<br>1.0 *** *** *** 0.03 *** **<br>0.02<br>0.5<br>0.01<br>0.0<br>0.00<br>-0.5 *** ** -0.01<br>-1.0 -0.02 **<br>Employment Average Assets per Labor Employment Average Total assets Labor<br>wage worker productivity wage productivity<br>Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly Competitive Partially Contestable Natural Monopoly<br><!-- End of picture text --> Source: World Bank staff analysis using Romania MoF firm-level data, 2011-2019.

Note: The sample includes all firms. The bars are average marginal effects. Employment is the log of the number of employees. Wage level is the log of average wage bill, where average wage bill is (real) labor cost divided by number of employees. Assets per worker is (real) total assets divided by the number of employees. Labor productivity is (real) revenue per worker. Employment growth is calculated as the difference between the number of employees in year t and t-1 divided by the average number of employees in year t and t-1. Wage growth is the difference between wage level in year t and t-1 divided by the average wage level in year t and t-1. Wage level is (real) labor cost divided by number of employees. Total asset growth (used as a proxy for investment) is calculated as the difference between (real) total assets in year t and t-1 divided by the average of total assets in year t and t-1. Labor productivity growth is calculated as the difference between (real) revenue per worker in year t and t-1 divided by the average revenue per worker in year t and t-1. SOE variables are dummy variables taking the value one if national or subnational governments have ownership stake of 10-100% in the firm. The reference group is private-owned enterprises (POEs), defined as firms where national or subnational governments own 0-9.9%. All models include 2-digit NACE industry and year-fixed effects. Standard errors clustered at the industry level are in parentheses. ***, **, and * indicate significance at 1 percent, 5 percent, and 10 percent. The model includes age groups: Young (3-5), Mature (6-10), and Old (>10), with Start-ups (0-2) being the reference category, and size group (except employment outcomes): Small (10-49), Medium (50-99), Large (100-499), and Very large (500+). With Micro (1-9) being the reference category. For outcome variables in level form, the age and size dummies are defined using contemporaneous age and size variables, but they are defined using lagged values for outcome variables in growth (or change) form.

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