Figure 5: Performance of SOE Relative to POEs by Ownership Type, 2011-2019 <!-- Start of picture text --> (a) Log of ...... (b) Growth of ......<br>5.0 *** 0.08<br>***<br>4.0 0.06 *** ******<br>***<br>3.0 *** *** *** *** *** *** 0.040.02 ** ***<br>2.0<br>*** 0.00<br>1.0 *** *** ***<br>-0.02<br>0.0 *** ** * ***<br>-0.04 ***<br>***<br>-1.0 *** *** -0.06 ***<br>-2.0 -0.08<br>10-100% 10-24.9% 25-49.9% 50% or 10-100% 10-24.9% 25-49.9% 50% or<br>more more<br>Ownership % Ownership %<br>Employment Average wage Employment Average wage<br>Assets per worker Labor productivity Total assets Labor productivity<br><!-- End of picture text --> Source: World Bank staff analysis using Romania MoF firm-level data, 2011-2019.

Note: The sample includes all firms. 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. 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. Where indicated, 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: Small (10-49), Medium (50-99), Large (100-499), and Very large (500+). with Micro (1-9) being the reference category.

**Romanian government support to firms tends to be geared towards majority owned SOEs** . Overall, the average SOE was four times more likely to receive government subsidies than the average POE, irrespective of their productivity levels (Figure 6(a)). However, not all ownership types of SOEs were likely to receive subsidies. Majority owned SOEs had a greater likelihood of receiving subsidies from the government than minority owned SOEs, and they were about five times more likely to receive subsidies than POEs. The likelihood of minority owned SOEs receiving subsidies from the government was not statistically significantly different from POEs.

**When firms  receive subsidies, majority owned SOEs tend to receive far larger amounts than POEs** . Among subsidy recipients, the average SOE also tends to receive far larger values of subsidies than the average POE (Figure 6 (b)). However, larger  subsidies are provided to majority owned SOEs compared to POEs or even the minority owned ones. Majority owned SOEs benefited more from government subsidies, and they were not more productive. Further, at the same level of (labor) productivity levels of subsidy recipients, majority owned SOEs also received larger values of subsidies. These findings are in line with Harrison et al. (2019) who found that listed SOEs in China were more likely to receive subsidies, and in larger values, than their listed POE counterparts. This may indicate that the majority owned SOEs have easier access to subsidies than the POEs.

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