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

See all articles by Ashwini K. Agrawal

Ashwini K. Agrawal

London School of Economics & Political Science (LSE)

Prasanna Tambe

Wharton School, U. Pennsylvania

Date Written: September 1, 2016

Abstract

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

Suggested Citation

Agrawal, Ashwini K. and Tambe, Prasanna, Private Equity and Workers' Career Paths: The Role of Technological Change (September 1, 2016). The Review of Financial Studies, Volume 29, Issue 9, pp. 2455–2489 (2016). Available at SSRN: https://ssrn.com/abstract=2286802 or http://dx.doi.org/10.2139/ssrn.2286802

Ashwini K. Agrawal

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Prasanna Tambe (Contact Author)

Wharton School, U. Pennsylvania ( email )

Philadelphia, PA 19104
United States

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