Private Equity, Jobs, and Productivity
American Economic Review
vol. 104,
no. 12, December 2014
(pp. 3956-90)
Abstract
Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers US buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing to controls defined by industry, size, age, and prior growth. Buyouts lead to modest net job losses but large increases in gross job creation and destruction. Buyouts also bring TFP gains at target firms, mainly through accelerated exit of less productive establishments and greater entry of highly productive ones. (JEL D24, G24, G32, G34, J23, J63, L25)Citation
Davis, Steven J., John Haltiwanger, Kyle Handley, Ron Jarmin, Josh Lerner, and Javier Miranda. 2014. "Private Equity, Jobs, and Productivity." American Economic Review, 104 (12): 3956-90. DOI: 10.1257/aer.104.12.3956Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- J23 Labor Demand
- J63 Labor Turnover; Vacancies; Layoffs
- L25 Firm Performance: Size, Diversification, and Scope