The Labor Market Effect of Foreign Acquisitions: Evidence from Chinese Manufacturing Firms

Posted: 18 May 2021

See all articles by Qing Liu

Qing Liu

Renmin University of China

Ruosi Lu

University of International Business and Economics (UIBE)

Chao Zhang

University of International Business and Economics (UIBE) - School of International Trade and Economics

Date Written: 2015

Abstract

The potential impacts of foreign acquisitions have long been debatable in both academic and policy circles in China, which have more or less shaped China's regulation policy regarding foreign acquisitions. This paper examines the causal effect of foreign acquisitions on the labor market in China with self-constructed firm level panel data. We combine the propensity score matching and the difference-in-differences techniques in our estimation to deal with the potential selection biases in acquisitions. Our results show that the impacts of foreign acquisitions in China are different from but also comparable to those in developed countries found in the literature. Specifically, foreign acquisitions have significant positive effects on the levels of wage and employment of target firms, but mildly negative impact on employment growth and insignificant impact on wage growth. The impacts show heterogeneities. We also check the potential channels of the impacts.

Keywords: Foreign acquisitions, Labor market, Matching, Difference-in-differences

JEL Classification: F21, F23, J31

Suggested Citation

Liu, Qing and Lu, Ruosi and Zhang, Chao, The Labor Market Effect of Foreign Acquisitions: Evidence from Chinese Manufacturing Firms (2015). China Economic Review, Vol. 32, 2015, Available at SSRN: https://ssrn.com/abstract=3846272

Qing Liu (Contact Author)

Renmin University of China ( email )

Ruosi Lu

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Chao Zhang

University of International Business and Economics (UIBE) - School of International Trade and Economics ( email )

10 East Huixin Street
Chaouang District
Beijing, 100029
China

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