Shaking Things Up: Unintended Consequences of Firm Acquisitions on Inequality and Diversity

71 Pages Posted: 9 Oct 2019

See all articles by Letian Zhang

Letian Zhang

Harvard University - Business School (HBS)

Date Written: May 27, 2019


Although millions of workers every year experience ownership change as their firms get acquired, it remains unclear how such an event shapes inequality in the workplace. This study addresses this question using a difference-in-differences design on a nationally representative sample covering 37,343 acquisition events from 1971 to 2015. Contrary to the common assumption, while acquisitions increase skill-based inequality, they reduce both racial and gender inequality. On the one hand, they widen the skill-based gap, leading to fewer jobs for middle managers, back-office workers, and blue-collar workers while adding more jobs for educated professionals. But on the other hand, they shake up existing arrangements and open up opportunities for racial minorities and women to move into managerial ranks and new occupations, especially in those establishments where white men have previously occupied the most central positions. This study shows that major organizational events could have diverging effects on inequality: although mergers and acquisitions favor the more skilled workers, they also produce an unintended consequence of making room for more racial and gender equality in the workplace.

Keywords: Diversity, Inequality, Mergers and Acquisitions

JEL Classification: J01

Suggested Citation

Zhang, Letian, Shaking Things Up: Unintended Consequences of Firm Acquisitions on Inequality and Diversity (May 27, 2019). Available at SSRN: or

Letian Zhang (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States


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