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Research Institute of Industrial Economics (IFN) Working Paper Series

No 906:
Private Equity, Layoffs, and Job Polarization

Martin Olsson () and Joacim Tåg ()

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

Keywords: Automation; Employment; Globalization; Job polarization; Private equity buyouts; Leveraged buyouts; Offshoring; Restructuring; Task-Biased technological Change; Unemployment; (follow links to similar papers)

JEL-Codes: G32; G34; J50; J60; M51; (follow links to similar papers)

29 pages, March 26, 2012, Revised May 1, 2016

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This paper is published as:
Olsson, Martin and Joacim Tåg, (2017), 'Private Equity, Layoffs, and Job Polarization', Journal of Labor Economics, Vol. 35, pages 697-754



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