Abstract

http://ssrn.com/abstract=2286802
 


 



Private Equity, Technological Investment, and Labor Outcomes


Ashwini K. Agrawal


New York University (NYU) - Department of Finance

Prasanna Tambe


New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

September 19, 2013


Abstract:     
This paper uses proprietary data on the employment histories of a large fraction of the U.S. labor force to assess how private equity acquisitions impact the long-run labor market outcomes of workers. In contrast to commonly held views, we find that employees working at a target firm at the time of an acquisition subsequently realize longer employment durations over their careers relative to comparable workers at non-acquired firms. We provide evidence that the mechanism for these outcomes is employees’ acquisition of human capital facilitated by firm investment in information technologies (IT) and complementary work practices. The effects are especially pronounced for workers who perform tasks that are central to IT-enabled production processes, for workers who are able to quickly acquire new skills, and for workers who remain at an acquired firm for longer durations before exit. We also find that employees of acquired firms are more likely to eventually transition to companies that have demand for IT-related human capital. The findings suggest that the recent wave of private equity acquisitions has imparted workers with transferable skills that complement modern technological advances.

Number of Pages in PDF File: 50

Keywords: private equity, labor outcomes, IT investment, human capital, unemployment, technology

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Date posted: June 29, 2013 ; Last revised: October 22, 2013

Suggested Citation

Agrawal, Ashwini K. and Tambe, Prasanna, Private Equity, Technological Investment, and Labor Outcomes (September 19, 2013). Available at SSRN: http://ssrn.com/abstract=2286802 or http://dx.doi.org/10.2139/ssrn.2286802

Contact Information

Ashwini K. Agrawal
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
Prasanna Tambe (Contact Author)
New York University (NYU) - Leonard N. Stern School of Business ( email )
44 West 4th Street
New York, NY NY 10012
United States

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )
44 West Fourth Street
New York, NY 10012
United States
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