Private Equity and Workers' Career Paths: The Role of Technological Change
The Review of Financial Studies, Volume 29, Issue 9, pp. 2455–2489 (2016)
46 Pages Posted: 29 Jun 2013 Last revised: 20 May 2018
Date Written: September 1, 2016
We analyze a new dataset on workers’ career paths to examine whether private equity (PE) investments can have positive spillover effects on workers. We study leveraged buyouts in the context of recent information technology (IT) diffusion, and find evidence supporting the argument that many employees of companies acquired by PE investors gain transferable, IT-complementary human capital. Our estimates indicate that these workers experience increases in both long-run employability and wages relative to what they would have realized in the absence of PE investment. The findings underscore PE’s role in mitigating the effects of workforce skill obsolescence due to technological change.
Keywords: private equity, labor outcomes, IT investment, human capital, unemployment, technology
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