Do Wages Rise or Fall Following Merger?
25 Pages Posted: 16 May 2004
Date Written: August 2003
Abstract
This paper provides a systematic empirical analysis of the effects of merger and acquisition activity on profitability and firm level employee remuneration in the United Kingdom, using a specially constructed database for the period 1979-1991. It finds that both profitability and wages rise following acquisition, and firms that merge within the same industry division experience larger increases in profitability and pay their workers higher wages than those engaged in unrelated acquisitions. This is, in part, the result of an increase in the efficiency with which labour is used following related acquisition.
Keywords: Mergers, acquisitions, panel data, wages, profits, employment
JEL Classification: J23, L23
Suggested Citation: Suggested Citation
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