Private Equity, Layoffs, and Job Polarization

46 Pages Posted: 21 Apr 2015 Last revised: 8 Nov 2016

See all articles by Martin Olsson

Martin Olsson

Research Institute of Industrial Economics (IFN)

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: May 1, 2016

Abstract

Private equity firms are often criticized for laying off workers, but the evidence on who loses their jobs and why is scarce. This paper argues that explanations for job polarization also explain layoffs after private equity buyouts. Buyouts reduce agency problems, which triggers automation and offshoring. Using rich employer-employee data, we show that buyouts generally do not affect unemployment incidence. However, unemployment incidence doubles for workers in less productive firms who perform routine or off-shorable job tasks. Job polarization is also much more marked among workers affected by buyouts than for the economy at large.

Keywords: Employment, job polarization, labor unions, private equity buyouts, leveraged buyouts, offshoring, restructuring, task-biased technological change, unemployment.

JEL Classification: G32, G34, J60

Suggested Citation

Olsson, Martin and Tåg, Joacim, Private Equity, Layoffs, and Job Polarization (May 1, 2016). IFN Working Paper No. 1068. Available at SSRN: https://ssrn.com/abstract=2596651

Martin Olsson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Register to save articles to
your library

Register

Paper statistics

Downloads
122
rank
225,921
Abstract Views
818
PlumX Metrics