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Firm Consolidation and Labor Market Outcomes

Author

Listed:
  • Dobbelaere, Sabien

    (Vrije Universiteit Amsterdam)

  • McCormack, Grace

    (University of Southern California)

  • Prinz, Daniel

    (World Bank)

  • Sovago, Sandor

    (University of Groningen)

Abstract

Using rich administrative data from the Netherlands, we study the consequences of firm consolidation for workers. For workers at acquired firms, takeovers are associated with a 8.5% drop in employment at the consolidated firm and a 2.6% drop in total labor income. These effects are persistent even four years later. We show that the primary mechanism for this job loss is labor restructuring at consolidating firms. Specifically, workers with higher-than-expected pay relative to their human capital and workers with skills that are likely already present at acquirers are less likely to be retained.

Suggested Citation

  • Dobbelaere, Sabien & McCormack, Grace & Prinz, Daniel & Sovago, Sandor, 2022. "Firm Consolidation and Labor Market Outcomes," IZA Discussion Papers 15724, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15724
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    References listed on IDEAS

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    More about this item

    Keywords

    takeovers; labor market outcomes; labor restructuring;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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