Post-Merger Restructuring of the Labor Force

92 Pages Posted: 5 Jun 2021

See all articles by Britta Gehrke

Britta Gehrke

Free University of Berlin (FUB) - School of Business & Economics; Government of the Federal Republic of Germany - Institute for Employment Research (IAB); IZA Institute of Labor Economics

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics; Erasmus Research Institute of Management (ERIM)

Christoph Schneider

University of Münster - Finance Center Münster

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Abstract

We study the restructuring of the labor force after mergers and acquisitions. Overall restructuring is large. Net employment of targets declines by more than half within two years after acquisitions relative to a matched sample, and is concentrated in targets that close all establishments. There is a substantial increase in employee turnover. We place our analysis within a framework in which acquirers seek growth options from targets and provide managerial capabilities to organize production more efficiently. Consistent with this framework, we show that growth and turnover are both higher for managers, and that firms become more hierarchical if they grow and if they become more diversified. Acquirers have a better-educated, better-paid, and more qualified workforce than targets, and they adapt the workforce by hiring new employees who are much younger and less expensive. Mergers create internal labor markets, which are more active if firms have more managerial capacities. However, most hiring is external, especially for managers.

JEL Classification: G30, G34, J24, J31, M51

Suggested Citation

Gehrke, Britta and Maug, Ernst G. and Obernberger, Stefan and Schneider, Christoph, Post-Merger Restructuring of the Labor Force. IZA Discussion Paper No. 14409, Available at SSRN: https://ssrn.com/abstract=3860589 or http://dx.doi.org/10.2139/ssrn.3860589

Britta Gehrke (Contact Author)

Free University of Berlin (FUB) - School of Business & Economics ( email )

Germany

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Regensburger Str. 104
Nuremberg, 90478
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ernst G. Maug

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Christoph Schneider

University of Münster - Finance Center Münster ( email )

Universitätsstraße 14-16
Münster, 48143
Germany

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