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Cross-border mergers and domestic-firm wages: Integrating ‘spillover effects’ and ‘bargaining effects’

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Listed:
  • Clougherty, Joseph A.
  • Gugler, Klaus Peter
  • Sørgard, Lars
  • Szücs, Florian

Abstract

Two literatures exist concerning cross-border merger activity’s impact on domestic wages: one focusing on spillover-effects; the other focusing on bargaining-effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, we predict that ‘bargaining’ (‘spillover’) effects are relatively more dominant under high (low) unionization rates and under high (low) degrees of relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is best characterized as related.

Suggested Citation

  • Clougherty, Joseph A. & Gugler, Klaus Peter & Sørgard, Lars & Szücs, Florian, 2014. "Cross-border mergers and domestic-firm wages: Integrating ‘spillover effects’ and ‘bargaining effects’," CEPR Discussion Papers 9863, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9863
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    References listed on IDEAS

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    Cited by:

    1. Luc Renneboog & Peter G. Szilagyi & Cara Vansteenkiste, 2017. "Creditor rights, claims enforcement, and bond performance in mergers and acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(2), pages 174-194, February.
    2. repec:eee:reveco:v:58:y:2018:i:c:p:330-339 is not listed on IDEAS
    3. repec:eee:corfin:v:50:y:2018:i:c:p:519-537 is not listed on IDEAS
    4. repec:pal:jintbs:v:50:y:2019:i:6:d:10.1057_s41267-019-00248-2 is not listed on IDEAS

    More about this item

    Keywords

    bargaining; Cross-Border Mergers; FDI; spillovers; wages;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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