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Private Equity and Employees

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  • Olsson, Martin

    ()
    (Research Institute of Industrial Economics (IFN))

  • Tåg, Joacim

    ()
    (Research Institute of Industrial Economics (IFN))

Abstract

Using linked employer-employee data from Sweden, a difference-in-difference approach, and 201 private equity buyouts undertaken between 1998 and 2004, we show that unemployment risk declines and labor income increases for employees in the wake of a private equity buyout. Unemployment risk declines despite lower employment growth for continuing establishments – attributable to hiring freezes rather than to layoffs – and a lack of change in firm level employment growth. A plausible explanation is relaxed financial constraints: the effects are strongest in industries dependent on external finance for growth, for non-divisional buyouts, and for buyouts just prior to 2001.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 906.

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Length: 29 pages
Date of creation: 26 Mar 2012
Date of revision:
Handle: RePEc:hhs:iuiwop:0906

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Keywords: Buyouts; Employment; Financial Constraints; LBO; Private Equity; Restructuring;

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Cited by:
  1. Pehr-Johan Norbäck & Lars Persson & Joacim Tag, 2013. "Buying to Sell: Private Equity Buyouts and Industrial Restructuring," CESifo Working Paper Series 4338, CESifo Group Munich.

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