Mergers and Acquisitions, Technological Change and Inequality
66 Pages Posted: 13 Jun 2016 Last revised: 29 Aug 2018
Date Written: August 17, 2018
We document important shifts in occupational composition following merger and acquisition (M&A) activity as well as increases in average wages and wage inequality. We propose M&As act as a catalyst for technological change. We argue that due to an increase in scale, improved efficiency or lower financial constraints, M&As facilitate technology adoption and automation, disproportionately increasing the productivity of high-skill workers and enabling the displacement of occupations involved in routine-tasks, typically mid-income occupations. An M&A event is associated with a 4.4% reduction in establishment routine share intensity and a 1.3% increase in the share of high skill workers at the target as compared to a matched sample of control establishments. We also observe higher hourly wages for the remaining workers in the establishment and an increase in wage polarization. Our results are generalized at the macro level as we are able to replicate similar patterns industry-wide.
Keywords: mergers, technological change, inequality
JEL Classification: G34, J2, J21, J31, D31
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