Mergers and Labor Market Outcomes in the US Airline Industry

38 Pages Posted: 10 Jul 2020 Last revised: 3 Nov 2020

See all articles by Myongjin Kim

Myongjin Kim

University of Oklahoma

Qi Ge

Vassar College - Department of Economics

Donggeun Kim

Industrial Bank of Korea

Date Written: November 3, 2020

Abstract

This paper examines US airline mergers between 1993 and 2018 and studies their impact on the labor market. Our difference-in-differences estimates indicate a significant reduction in the merging airlines' long-term wage and fringe benefits following the mergers. The effect is particularly salient among large-scale mergers involving major airlines and low cost carriers. The results also suggest a negative short-term employment impact of mergers that varies by occupation types. Our findings are consistent with the impact of merger-induced monopsony power discussed in recent literature and offer important policy implications regarding how to account for employer monopsony power during mergers and acquisitions.

Keywords: mergers and acquisitions, wage, employment, airline industry

JEL Classification: L93, G34, J42, K21

Suggested Citation

Kim, Myongjin and Ge, Qi and Kim, Donggeun, Mergers and Labor Market Outcomes in the US Airline Industry (November 3, 2020). Available at SSRN: https://ssrn.com/abstract=3615410 or http://dx.doi.org/10.2139/ssrn.3615410

Myongjin Kim

University of Oklahoma ( email )

307 W Brooks
Norman, OK 73019
United States

Qi Ge

Vassar College - Department of Economics ( email )

124 Raymond Avenue
Poughkeepsie, NY 12604
United States

Donggeun Kim (Contact Author)

Industrial Bank of Korea ( email )

79, Eulji-ro, Jung-go
Seoul, 04541
Korea, Republic of (South Korea)
821054250792 (Phone)

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