Foreign Acquisition, Wages and Productivity
AbstractThis paper studies the effect of foreign acquisition on wages and total factor productivity (TFP) in the years following a takeover by using unique detailed firm-level data for Sweden for the period 1993-2002. The paper takes particular account of the potential endogeneity of the acquisition decision (for example due to “cherry picking”) by implementing an instrumental variable approach and propensity score matching with difference-in-difference estimation technique. Moreover, in line with recent literature on firm heterogeneity in international trade, this paper allows for the acquisition effect to differ depending on whether the targeted firms were domestic multinational or non-multinationals before the foreign takeover. This paper also allows for the acquisition effect to differ depending on whether the acquisition is horizontal or vertical. The result shows that foreign acquisition has no effects on overall, skilled or less-skilled wage growth neither in targeted Swedish MNEs nor in targeted Swedish non-MNEs and neither if the acquisition was motivated by vertical or horizontal motives. However, the results indicate that both targeted Swedish MNEs and non- MNEs have better growth in TFP after vertical foreign acquisition only but no such impact from horizontal foreign acquisition
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Bibliographic InfoPaper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 10-21.
Length: 32 pages
Date of creation: 01 Jan 2010
Date of revision:
Contact details of provider:
Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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heterogeneity; multinational enterprises; acquisitions; wage differentials; productivity; matching; difference-in-difference;
Other versions of this item:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-23 (All new papers)
- NEP-EFF-2011-04-23 (Efficiency & Productivity)
- NEP-LAB-2011-04-23 (Labour Economics)
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- Joachim Wagner, 2011.
"Productivity and International Firm Activities: What do we know?,"
Working Paper Series in Economics
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- John P. Weche Geluebcke, 2012. "Foreign and Domestic Takeovers in Germany: Cherry-picking and Lemon-grabbing," Working Paper Series in Economics 240, University of Lüneburg, Institute of Economics.
- Oberhofer, Harald & Stöckl, Matthias & Winner, Hannes, 2012.
"The Wage Premium of Globalization: Evidence from European Mergers and Acquisitions,"
Working Papers in Economics and Finance
2012-1, University of Salzburg.
- Harald Oberhofer & Matthias Stöckl & Hannes Winner, 2012. "The Wage Premium of Globalisation: Evidence from European Mergers and Acquisitions," WIFO Working Papers 416, WIFO.
- Oberhofer, Harald & Stöckl, Matthias & Winner, Hannes, 2012. "The wage premium of globalization: Evidence from European mergers and acquisitions," Economics Discussion Papers 2012-6, Kiel Institute for the World Economy.
- John P. Weche Geluebcke, 2012. "Foreign and Domestic Takeovers in Germany: First Comparative Evidence on the Post-acquisition Target Performance using new Data," Working Paper Series in Economics 249, University of Lüneburg, Institute of Economics.
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