Private Equity and Human Capital Risk

Private Equity and Human Capital Risk

Manfred Antoni, Ernst Maug, Stefan Obernberger

Series number :

Serial Number: 

Date posted :

August 01 2017

Last revised :

August 02 2017
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  • private equity • 
  • restructuring • 
  • Human Capital Risk • 
  • Employment • 
  • wages

We study the impact of leveraged buyouts in Germany on employees' wages, employment, and career paths. We contrast different views of buyouts, which see LBOs as facilitators of organizational and technological modernization, or as vehicles for transferring wealth from employees to shareholders.

We conduct matched-sample difference-in-differences estimations with more than 147,000 LBO employees and a carefully matched control group. LBOs increase annual income in the short term, but reduce income by about 11% in the long term. White-collar workers and middle management lose most, probably because of organizational streamlining. LBOs in our sample do not foster trends related to technological modernization such as skill-biased technological change or job polarization. We find a strong negative impact of LBOs for older employees, but no support for the notion that shareholders benefit from LBOs by forcing employees to accept lower wages. All human capital impairments are borne by employees who leave the firm and become unemployed or employed in a different industry.


Real name:
Manfred Antoni
Real name:
Stefan Obernberger