Mergers and Acquisitions, Technological Change and Inequality

Abstract

Mergers and acquisitions (M&As) are an important mechanism through which technology is adopted by firms. We document patterns of labor reallocation and wage changes following M&As, consistent with the adoption of technology. Specifically, we show target establishments invest more in technology, become less routine task intensive, employ a greater share of high-technology workers, and pay more unequal wages. We document evidence for three non-mutually exclusive mechanisms underlying this effect: differences in the ability to integrate technology efficiently; financial constraints, and agency conflicts. Moreover, the within-establishment patterns generalize to the industry-level, confirming the external validity of our findings.

Keywords: M&A, Occupational Change, Technological Change, Wage Inequality

JEL Classification: G34, J24, J31, O33