Private Equity and Pay Gaps Inside the Firm

61 Pages Posted: 28 Dec 2022 Last revised: 8 Feb 2023

See all articles by Lily H. Fang

Lily H. Fang

INSEAD - Finance

Jim Goldman

University of Warwick - Warwick Business School

Alexandra Roulet


Date Written: December 19, 2022


Exploiting a 20-year sample of leveraged buyouts matched to French administrative data, we document that target firms post-buyout experience reduced within-firm wage inequality together with increased profitability relative to control firms. Pay gaps between men and women, managers and non-managers, and older and younger employees decline by 9%, 4%, and 21%. The p90/p50 and p90/p10 wage ratios also decline. Composition effects drive these results. Post-buyout, target firms separate from expensive employees in the high-pay categories (men, managers, and older employees) and replace them with cheaper and younger ones. Employees staying in the firm experience small relative pay increases. Separated employees in high-pay categories were paid more before the buyout than similar employees at other firms and have worse career outcomes after separation.

Suggested Citation

Fang, Lily H. and Goldman, Jim and Roulet, Alexandra, Private Equity and Pay Gaps Inside the Firm (December 19, 2022). INSEAD Working Paper No. 2023/04/FIN/EPS, Available at SSRN: or

Lily H. Fang

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex

Jim Goldman (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Alexandra Roulet

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex

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