Private Equity Buyouts and Employee Health

We examine the role of employee health for the restructuring of the labor force during private equity buyouts using employee-level data of 56,000 Dutch buyout employees. We find no evidence that buyouts have a negative impact on the health of buyout employees. Employees lose income and employment after buyouts, and these losses are far larger for employees in poorer health. The negative effect of buyouts on employees’ incomes is buffered by social transfers, and this buffer is larger for employees in poorer health, who exit the labor market at a much higher rate. Health characteristics associated with lower wages in the general population are strongly predictive of job loss after buyouts. This paper was accepted by David Sraer, finance. Funding: This work was supported by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) [Projects MA 3317/3-1 and MA 3317/3-2]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01874 .