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The Employment Effects of Mergers in a Declining Industry: The Case of South African Gold Mining

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  • Behar Alberto

    () (University of Oxford, Centre for the Study of African Economies)

  • Hodge James

    () (Genesis Analytics)

Abstract

With data from the South African gold mining industry, we find evidence consistent with theories that mergers and acquisitions allow for the shedding of excess labor. Mergers are arguably exogenous in our sample, while an industry in decline can provide a good setting for testing the theories. The data clearly portray rises in real wages and falling employment after the end of apartheid. We find evidence of a significant negative effect of mergers/acquisitions on employment. The magnitude is similar to the effect in Continental Europe and larger than the effect in the United States. This supports the view that negative employment impacts are more likely in rigid labor markets.

Suggested Citation

  • 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.
  • Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:29
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    References listed on IDEAS

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    Cited by:

    1. 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).
    2. Alberto Behar, 2015. "Comparing the Employment-Output Elasticities of Expatriates and Nationals in the Gulf Cooperation Council," IMF Working Papers 15/191, International Monetary Fund.

    More about this item

    JEL classification:

    • 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

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