This Website uses cookies. By using this website you are agreeing to our use of cookies and to the terms and conditions listed in our data protection policy. Read more

Working Paper No. 906

Private Equity, Layoffs, and Job Polarization

Working Paper
Olsson, Martin and Joacim Tåg (2012). “Private Equity, Layoffs, and Job Polarization”. IFN Working Paper No. 906. Stockholm: Research Institute of Industrial Economics (IFN).

Martin Olsson, Joacim Tåg

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 offshorable job tasks. Job polarization is also much more marked among workers affected by buyouts than for the economy at large.