Private Equity, Technological Investment, and Labor Outcomes
Ashwini K. Agrawal
New York University (NYU) - Department of Finance
New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences
July 17, 2014
We use proprietary data on the employment histories of a large fraction of the U.S. labor force to assess how the most recent wave of leveraged buyouts (LBO’s) has impacted the long-run career paths of individual workers. In contrast to commonly held views, the average employee from an LBO-acquired firm is subsequently employed for a longer amount of time over her career than similar individuals from non-acquired firms. We argue that the primary explanation for these findings is that private equity ownership has facilitated the implementation of modern information technologies (IT) in target firms, imparting many employees with new skills. The effects are most pronounced for workers who perform tasks that have been impacted by IT-enabled production methods. We also find that employees of LBO targets are more likely to eventually transition to companies that have demand for technical skills. The findings underscore the role of private equity in diffusing new technologies and providing workers with human capital that complements modern technological advances.
Number of Pages in PDF File: 52
Keywords: private equity, labor outcomes, IT investment, human capital, unemployment, technologyworking papers series
Date posted: June 29, 2013 ; Last revised: August 21, 2014
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