Practical Applications of Private Equity Investment and Local Employment Growth: A County-Level Analysis

Practical Applications Summary

In Private Equity Investment and Local Employment Growth: A County-Level Analysis, from the Winter 2020 issue of The Journal of Alternative Investments, Joshua Cox (of Control Risks) and Bronwyn Bailey (of BB-Advisors) use a new approach to answer the question of whether private equity investment increases employment. Previous studies have been inconclusive or contradictory. Sometimes past results indicated a loss of employment due to increased efficiencies from private equity investment, while other results indicated an increase in employment, albeit a statistically insignificant one. These studies focused on company-level employment growth, however. In contrast, Cox and Bailey examine countywide data and look for spillover effects: employment growth beyond that in the company receiving the private equity investment. The authors examine a host of control variables that might otherwise explain employment growth. In each statistical test, the association between lagged, countywide employment growth and private equity investment is positive and statistically significant.

TOPICS: Private equity, global, performance measurement