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Comment on Davis, Haltiwanger, Handley, Lipsius, Lerner, and Miranda, “The Economic Effects of Private Equity Buyouts”

Summary:
The research team that brought you a study that compared employment dynamics in companies taken over by private equity with similar companies not acquired by PE (“Private Equity, Jobs, and Productivity,” American Economic Review 2004) is out with a new paper. The news for workers, already troubling in their earlier report, is even worse this ...

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The research team that brought you a study that compared employment dynamics in companies taken over by private equity with similar companies not acquired by PE (“Private Equity, Jobs, and Productivity,” American Economic Review 2004) is out with a new paper. The news for workers, already troubling in their earlier report, is even worse this time around.

In the earlier study of employment effects of private equity buyouts (Davis, Haltiwanger, Handley, Jarmin, Lerner, and Miranda 2014), the researchers looked at what happened to employment following the private equity buyout in establishments owned by the target company at the time the buyout occurred   as well as what happened to employment in the target firm. The new study examines only what happens to employment in the target firm.

This is an important difference, and raises the question of why the employment effects in establishments is not part of the analysis in the just released paper.

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