Shaking Things Up: Unintended Consequences of Firm Acquisitions on Inequality and Diversity
71 Pages Posted: 9 Oct 2019
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
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