The employment effects of mergers in a declining industry: the case of South African gold mining
AbstractAn industry in decline provides an appropriate setting for the theory that mergers and acquisitions destroy implicit contracts and allow for the shedding of excess labour. We test this theory using provincial data from the South African gold mining industry, which has been in decline over the last two decades. Our data clearly portray rises in real wages and falling employment after the end of apartheid and our econometric results are remarkably consistent with standard labour demand theory. We find evidence of a significant negative effect of mergers/acquisitions on employment of a magnitude similar to that found for Continental Europe. This supports the view that negative employment effects are more likely in rigid labour markets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 335.
Date of creation: 01 Jul 2007
Date of revision:
Labour Demand; Mergers; Gold Industry;
Other versions of this item:
- Behar Alberto & Hodge James, 2008. "The Employment Effects of Mergers in a Declining Industry: The Case of South African Gold Mining," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-20, August.
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
This paper has been announced in the following NEP Reports:
- NEP-AFR-2007-08-08 (Africa)
- NEP-ALL-2007-08-08 (All new papers)
- NEP-COM-2007-08-08 (Industrial Competition)
- NEP-DEV-2007-08-08 (Development)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Taylor, Mark P. & Sarno, Lucio, 1998.
"The behavior of real exchange rates during the post-Bretton Woods period,"
Journal of International Economics,
Elsevier, vol. 46(2), pages 281-312, December.
- Sarno, Lucio & Taylor, Mark P, 1997. "The Behaviour of Real Exchange Rates During the Post-Bretton Woods Period," CEPR Discussion Papers 1730, C.E.P.R. Discussion Papers.
- Jönsson, Kristian, 2003.
"Cross-sectional dependency and size distortion in a small-sample homogeneous panel-data unit root test,"
2003:10, Lund University, Department of Economics.
- Kristian Jönsson, 2005. "Cross-sectional Dependency and Size Distortion in a Small-sample Homogeneous Panel Data Unit Root Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 369-392, 06.
- Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107, September.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Pesaran, M. Hashem & Smith, Ron, 1995.
"Estimating long-run relationships from dynamic heterogeneous panels,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 79-113, July.
- Pesaran, M.H. & Smith, R., 1992. "Estimating Long-Run Relationships From Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9215, Faculty of Economics, University of Cambridge.
- Banerjee, Anindya, 1999. " Panel Data Unit Roots and Cointegration: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 607-29, Special I.
- Neil R. Ericsson & James G. MacKinnon, 2000.
"Distributions of Error Correction Tests for Cointegration,"
Econometric Society World Congress 2000 Contributed Papers
0561, Econometric Society.
- Neil R. Ericsson & James G. MacKinnon, 2002. "Distributions of error correction tests for cointegration," Econometrics Journal, Royal Economic Society, vol. 5(2), pages 285-318, 06.
- Neil R. Ericsson & James G. MacKinnon, 1999. "Distributions of error correction tests for cointegration," International Finance Discussion Papers 655, Board of Governors of the Federal Reserve System (U.S.).
- Conyon, Martin J. & Girma, Sourafel & Thompson, Steve & Wright, Peter W., 2002. "The impact of mergers and acquisitions on company employment in the United Kingdom," European Economic Review, Elsevier, vol. 46(1), pages 31-49, January.
- Pesaran, M.H. & Shin, Y., 1995. "An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis," Cambridge Working Papers in Economics 9514, Faculty of Economics, University of Cambridge.
- Severin Borenstein & Joseph Farrell, 2007.
"Do investors forecast fat firms? Evidence from the gold-mining industry,"
RAND Journal of Economics,
RAND Corporation, vol. 38(3), pages 626-647, 09.
- Borenstein, Severin & Farrell, Joseph, 2006. "Do Investors Forecast Fat Firms? Evidence from the Gold Mining Industry," Competition Policy Center, Working Paper Series qt4h02v1jp, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Severin Borenstein & Joseph Farrell, 1999. "Do Investors Forecast Fat Firms? Evidence from the Gold Mining Industry," NBER Working Papers 7075, National Bureau of Economic Research, Inc.
- Andrei Shleifer & Lawrence H. Summers, 1987.
"Breach of Trust in Hostile Takeovers,"
NBER Working Papers
2342, National Bureau of Economic Research, Inc.
- 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.
- Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
- Gugler, Klaus & Yurtoglu, B. Burcin, 2004. "The effects of mergers on company employment in the USA and Europe," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 481-502, April.
- Oliver Budzinski & Jürgen-Peter Kretschmer, 2009.
"Horizontal Mergers, Involuntary Unemployment, and Welfare,"
90/09, University of Southern Denmark, Department of Environmental and Business Economics.
- Oliver Budzinski & Jürgen-Peter Kretschmer, 2009. "Horizontal Mergers, Involuntary Unemployment, and Welfare," MAGKS Papers on Economics 200907, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise).
If references are entirely missing, you can add them using this form.