Private Equity Buyouts and Employee Health

75 Pages Posted: 15 May 2020 Last revised: 17 Aug 2021

See all articles by Pilar Garcia-Gomez

Pilar Garcia-Gomez

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics; Erasmus Research Institute of Management (ERIM)

Date Written: May 13, 2020

Abstract

We relate employees’ health to their productivity to analyze the restructuring of the labor force during Private Equity buyouts using employee-level data of 56,000 Dutch buyout employees. Employees with a worse health status before the buyout face the most substantial losses of income and employment. Health characteristics associated with lower wages in the general population are strongly predictive of job loss after buyouts. Consistent with the notion that state-level insurance substitutes for firm-level insurance, more than half of the negative effect of buyouts on employees’ incomes is buffered by social transfers. We find no evidence that buyouts worsen employees’ health.

Keywords: Private Equity, Buyouts, Restructuring, Health, Human Capital Risk, Wages, Unemployment Insurance

JEL Classification: G30, G34, I12, J65, J24, J31, M51

Suggested Citation

Garcia Gomez, Pilar and Maug, Ernst G. and Obernberger, Stefan, Private Equity Buyouts and Employee Health (May 13, 2020). European Corporate Governance Institute – Finance Working Paper No. 680/2020, Available at SSRN: https://ssrn.com/abstract=3601813 or http://dx.doi.org/10.2139/ssrn.3601813

Pilar Garcia Gomez

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Ernst G. Maug (Contact Author)

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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