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Employment growth following takeovers

Author

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  • Karen Geurts
  • Jo Van Biesebroeck

Abstract

We use a comprehensive sample of takeovers in Belgium to show that they are remarkably common and an important part of many firms’ growth process. They affect both small and large firms and, over a five-year period, 17 percent of private employment. We estimate the impact of takeovers on employment growth of the merged entity using an empirical framework that explicitly takes into account that mergers are formed by pairs of firms. It allows for post-merger employment outcomes that are heterogeneous and determined jointly by the characteristics of both partners. The average merger is estimated to reduce employment by 8% over a four-year period, but the contraction can be three times as large for some types of mergers, while employment expands for other types.

Suggested Citation

  • Karen Geurts & Jo Van Biesebroeck, 2017. "Employment growth following takeovers," Working Papers of Department of Economics, Leuven 590697, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:590697
    Note: paper number DPS 17.12
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    File URL: https://lirias.kuleuven.be/retrieve/f8265f36-9a26-48f1-916a-2e28a75184ea
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    2. Berger, David & Hasenzagl, Thomas & Herkenhoff, Kyle & Mongey, Simon & Posner, Eric A., 2025. "Merger guidelines for the labor market," Journal of Monetary Economics, Elsevier, vol. 153(C).
    3. Dobbelaere, Sabien & McCormack, Grace & Prinz, Daniel & Sóvágó, Sándor, 2025. "Firm consolidation and labor market outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 235(C).
    4. Jun Du & Sourafel Girma & Holger Görg & Ignat Stepanok, 2023. "Who wins and who loses from state subsidies?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 1007-1031, August.
    5. Gibbon, Alexandra J. & Schain, Jan Philip, 2023. "Rising markups, common ownership, and technological capacities," International Journal of Industrial Organization, Elsevier, vol. 89(C).

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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