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Private Equity and Workers’ Career Paths: The Role of Technological Change

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  • Ashwini Agrawal
  • Prasanna Tambe

Abstract

We analyze a new dataset on workers’ career paths to examine whether private equity (PE) investments can have positive spillover effects on workers. We study leveraged buyouts in the context of recent information technology (IT) diffusion, and find evidence supporting the argument that many employees of companies acquired by PE investors gain transferable, IT-complementary human capital. Our estimates indicate that these workers experience increases in both long-run employability and wages relative to what they would have realized in the absence of PE investment. The findings underscore PE’s role in mitigating the effects of workforce skill obsolescence resulting from technological change. Received November 3, 2014; accepted December 23, 2015 by Editor Francesca Cornelli.

Suggested Citation

  • Ashwini Agrawal & Prasanna Tambe, 2016. "Private Equity and Workers’ Career Paths: The Role of Technological Change," The Review of Financial Studies, Society for Financial Studies, vol. 29(9), pages 2455-2489.
    • Handle: RePEc:oup:rfinst:v:29:y:2016:i:9:p:2455-2489.
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