Private equity buyouts arouse intense interest among investors and business owners as well as policymakers and politicians, but the difficulty of assembling the data needed for a systematic evaluation makes assessing their effects hard. This column uses data on thousands of buyouts in the US to examine the effects on employment, job reallocation, productivity, and worker compensation. The findings suggest that the effects differ greatly by type of buyout, with the credit conditions at the time of buyout, and with the post-buyout evolution of credit conditions and the macroeconomy, casting doubt on the efficacy of ‘one-size-fits-all’ policy prescriptions for private equity.

Economist Susan Houseman of the Upjohn Institute for Employment Research talks about the manufacturing sector with EconTalk host Russ Roberts. Houseman argues that the data surrounding both manufacturing output and employment have been misunderstood and misinterpreted. In particular, she argues that conclusions about the growth of manufacturing are driven overwhelmingly by computer production while the rest of manufacturing has been stagnant. She also argues that productivity has a small role in reducing manufacturing employment. Trade has been the main cause of employment reductions. These claims go against the standard narratives most economists have been telling for the last 20 years.

While new technologies have enabled new economic opportunities and labor arrangements, current laws largely treat employment as a binary between independent contractors and full-time employees. This limits employers who might otherwise want to offer some, but not all benefits; and unnecessarily restricts employees who need flexibility and the ability to set their own hours.

Private-equity deals result in worse pay for workers, and, depending on whether the buyout target was public or not, fewer jobs, according to a newly published study. The study of some 6,000 private-equity deals between 1980 and 2013 finds that the average pay per worker falls 1.7% after buyouts.