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American Economic Review Vol. 104 No. 12 2014

Private Equity, Jobs, and Productivity

Steven J. Davis1; John Haltiwanger2; Kyle Handley3; Ron S. Jarmin4; Josh Lerner5; Javier Miranda6

1 University of Chicago Booth School, 5807 South Woodlawn Avenue, Chicago, IL 60637 (e-mail: ) · 2 Department of Economics, University of Maryland, College Park, MD 20742 (e-mail: ) · 3 University of Michigan Ross School, 701 Tappan Street, Ann Arbor, MI 48109 (e-mail: ) · 4 US Census Bureau, 4600 Silver Hill Road, Washington, DC 20233 (e-mail: ) · 5 Harvard Business School, Rock 314, Boston, MA 02163 (e-mail: ) · 6 Center for Economic Studies, US Census Bureau, 4600 Silver Hill Road, Suitland, MD 20746 (e-mail: ).

Abstract

Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers US buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing to controls defined by industry, size, age, and prior growth. Buyouts lead to modest net job losses but large increases in gross job creation and destruction. Buyouts also bring TFP gains at target firms, mainly through accelerated exit of less productive establishments and greater entry of highly productive ones.

DOI
10.1257/aer.104.12.3956
Volume
104
Issue
12
Pages
3956-3990
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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