Labor Demand Similarity and Mergers and Acquisitions: Evidence from 3 Million Job Postings

Abstract

We gauge labor market competition using job postings and show that firms tend to acquire companies that are their local labor competitors. Cross-sectional analyses indicate local labor market competitor acquisitions are more likely in industries with greater corporate culture similarities, more binding labor non-compete agreements, and non-rival product market competitors. Using a quasi-experiment, we find employees’ perceptions of compensation and career outlooks are negatively affected following a merger between firms that are local labor market competitors, suggesting that this type of merger reduces the welfare of the labor market due to the change in the competition environment.

Keywords: Mergers and Acquisitions, Labor Market Competition, Glassdoor