The effects of private equity buyouts on employment, productivity, and job reallocation vary tremendously with macroeconomic and credit conditions, across private equity groups, and by type of buyout. We reach this conclusion by examining the most extensive database of U.S. buyouts ever compiled, encompassing thousands of buyout targets from 1980 to 2013 and millions of control firms. Employment shrinks 12% over two years after buyouts of publicly listed firms—on average, and relative to control firms—but expands 15% after buyouts of privately held firms. Postbuyout productivity gains at target firms are large on average and much larger yet for deals executed amid tight credit conditions. A postbuyout tightening of credit conditions or slowing of gross domestic product growth curtails employment growth and intrafirm job reallocation at target firms. We also show that buyout effects differ across the private equity groups that sponsor buyouts, and these differences persist over time at the group level. Rapid upscaling in deal flow at the group level brings lower employment growth at target firms. We relate these findings to theories of private equity that highlight agency problems at portfolio firms and within the private equity industry itself.

Understanding human behavior in its entire complexity is an ambitious if not impossible challenge. It is however possible to study particular aspects of human behavior through experiments that allow us to isolate specific facets in the decision-making process, ultimately leading to a better understanding of human behavior as a whole. This thesis covers three experimental articles on unethical economic behavior and sheds light on the motives and circumstances that lead individuals to engage in these activities. Clearly, unethical behavior in all its different manifestations can pose great risk to society – both at the large (e.g. corporate tax evasion) and small (e.g. shoplifting) scale – making it a relevant topic to be studied in economic research. Trying to understand unethical behavior through the lenses of traditional economic theory is problematic.