The principal findings from a 1988 study of the effects of privatization--the transfer of traditional government activities to the private sector--in 28 cities and counties are the following: (1) jobs created by firms taking over a public function constituted about 80 to 90 percent of the jobs lost in the public sector; (2) only about 7 percent of affected workers were laid off; (3) 58 percent of the local government workers affected by privatization took jobs with the government contractors; (4) local government employee compensation packages offered to workers were found to be more generous than those of private contractors; (5) the cities and counties in the study were highly satisfied with privatization; and (6) lower labor costs were only one of many ways that privatization saved money for the governments, the others most commonly cited being lower operating costs, better management, higher worker productivity, and better or less expensive equipment. The major conclusion was that in the long run privatization is most successful in localities that have protected the jobs of employees with "no lay-off agreements" or "right of first refusal" requirements. The purposive sample of localities studied was selected from lists compiled by such groups as the International City Management Association and the Privatization Council. (The document contains a 36-item bibliography and copies of the questions asked by interviewers.) (CML)