The Burden of Being Public: Evidence from Local Labor Markets

Abstract

We exploit rich, cross-occupation employment data and quasi-experimental variation in IPO completion to quantify the direct labor compliance costs of being a public company. We precisely estimate a small, positive effect of public listings on local employment for compliance occupations that translates to average annual firm-level compliance costs of no higher than $1.3M. Using dynamic cross-sectional variation in the regulatory burden for public companies, we find that labor costs are highly sensitive to capital markets regulation. However, our estimates are substantially lower than self-reported compliance costs and suggest that labor costs are likely not an important determinant of listing status.