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Private Equity and Employees

  • Olsson, Martin

    ()

    (Research Institute of Industrial Economics (IFN))

  • Tåg, Joacim

    ()

    (Research Institute of Industrial Economics (IFN))

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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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:
Publication status: Forthcoming as Olsson, Martin and Joacim Tåg, 'Private Equity, Layoffs, and Job Polarization' in Journal of Labor Economics, 2017.
Handle: RePEc:hhs:iuiwop:0906
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Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

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