Acquiring Labor

58 Pages Posted: 20 Oct 2011 Last revised: 20 Sep 2012

See all articles by Paige Ouimet

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Rebecca Zarutskie

Federal Reserve Board

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2011


We present evidence that some firms pursue M&A activity with the objective of obtaining a larger workforce. Firms most likely to be acquired for their large labor force, firms with the largest ex ante employment, are associated with more positive post-merger employment outcomes. Moreover, we find this relation is strongest when acquiring labor outside of an M&A is likely to be most difficult, due to tight labor conditions, or most valuable, in high human capital industries. We further find that high employment target firms are associated with relatively greater post-merger wage increases and lower post-merger employee turnover. We find no evidence that the positive relation between target ex ante employment and ex post employment change is driven by target asset size, market capitalization, industry, profitability or acquirer characteristics. Our findings do not exclude the possibility that a different subset of M&A activity may be motivated to penalize managers who have tolerated over-employment. Indeed, we find evidence consistent with this disciplinary motivation when considering acquisitions of targets in declining industries.

Suggested Citation

Ouimet, Paige and Zarutskie, Rebecca, Acquiring Labor (October 1, 2011). US Census Bureau Center for Economic Studies Paper No. CES-WP-11-32. Available at SSRN: or

Paige Ouimet (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Rebecca Zarutskie

Federal Reserve Board ( email )

20th Street and C Streets NW
Mailstop 155-B
Washington, DC 20551
United States
202-452-5292 (Phone)

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