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Workers, Unions, and Takeovers

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  • Xiaoyang Li

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    Abstract

    How do takeovers affect workers’ wages and job security in the short-run? What role does the labor union play in mitigating these effects? I answer these two questions by analyzing wage and employment outcomes of over 4,000 public firms that were acquired between 1981 and 2002, using establishment-level data from the U.S. Census Bureau. I find that target establishments exhibit a net contraction in wages and employment, relative to comparable establishments after takeovers. Targets’ establishments in more unionized industries experience worse wage and employment outcomes after takeovers. These adverse effects are exacerbated when the establishment is located in a state with Right-to-work laws where unions face a less favorable bargaining environment. These findings indicate that target firms’ employees are negatively affected by takeovers and that their labor unions do not mitigate these negative effects. Copyright Springer Science+Business Media, LLC 2012

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    File URL: http://hdl.handle.net/10.1007/s12122-012-9142-0
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Labor Research.

    Volume (Year): 33 (2012)
    Issue (Month): 4 (December)
    Pages: 443-460

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    Handle: RePEc:spr:jlabre:v:33:y:2012:i:4:p:443-460

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    Web page: http://www.springer.com/economics/journal/12122

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    Related research

    Keywords: Wage; Employment; Takeovers; Labor unions;

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    1. John DiNardo & David S. Lee, 2004. "Economic Impacts of New Unionization On Private Sector Employers: 1984-2001," The Quarterly Journal of Economics, MIT Press, vol. 119(4), pages 1383-1441, November.
    2. McGuckin, Robert H. & Nguyen, Sang V., 2001. "The impact of ownership changes: a view from labor markets," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 739-762, April.
    3. Steven J. Davis & John C. Haltiwanger & Ron S. Jarmin & Josh Lerner & Javier Miranda, 2011. "Private Equity and Employment," NBER Working Papers 17399, National Bureau of Economic Research, Inc.
    4. Pagano, Marco & Volpin, Paolo, 2002. "Managers, Workers and Corporate Control," CEPR Discussion Papers 3649, C.E.P.R. Discussion Papers.
    5. Lichtenberg, Frank R & Siegel, Donald, 1990. "The Effect of Ownership Changes on the Employment and Wages of Central Office and Other Personnel," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 383-408, October.
    6. Farber, Henry S, 1984. "Right-to-Work Laws and the Extent of Unionization," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 319-52, July.
    7. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
    8. Kaplan, Steven, 1989. "The effects of management buyouts on operating performance and value," Journal of Financial Economics, Elsevier, vol. 24(2), pages 217-254.
    9. Chen, Huafeng Jason & Kacperczyk, Marcin & Ortiz-Molina, Hernán, 2011. "Labor Unions, Operating Flexibility, and the Cost of Equity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(01), pages 25-58, March.
    10. John DiNardo & David S. Lee, 2004. "Economic Impacts of Unionization on Private Sector Employers: 1984-2001," NBER Working Papers 10598, National Bureau of Economic Research, Inc.
    11. Ellwood, David T & Fine, Glenn, 1987. "The Impact of Right-to-Work Laws on Union Organizing," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 250-73, April.
    12. Henry S. Farber, 1984. "Right-to-Work Laws and the Extent of Unionization," NBER Working Papers 1136, National Bureau of Economic Research, Inc.
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