Mergers and Acquisitions, Technological Change and Inequality

66 Pages Posted: 13 Jun 2016 Last revised: 10 May 2018

Wenting Ma

University of North Carolina at Chapel Hill

Paige Ouimet

University of North Carolina at Chapel Hill

Elena Simintzi

University of British Columbia

Date Written: April 2018

Abstract

We document important shifts in occupational composition following merger and acquisition (M&A) activity as well as increases in median wages and wage inequality. We propose M&As act as a catalyst for skill-biased and routinebiased 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 4.7% reduction in establishment routine task 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

Suggested Citation

Ma, Wenting and Ouimet, Paige and Simintzi, Elena, Mergers and Acquisitions, Technological Change and Inequality (April 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 485/2016. Available at SSRN: https://ssrn.com/abstract=2793887 or http://dx.doi.org/10.2139/ssrn.2793887

Wenting Ma

University of North Carolina at Chapel Hill ( email )

CB 3305, Gardner Hall
Chapel Hill, NC NC 27514
United States

Paige Ouimet (Contact Author)

University of North Carolina at Chapel Hill ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Elena Simintzi

University of British Columbia ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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