Job Transitions and Employee Earnings after Acquisitions: Linking Corporate and Worker Outcomes

50 Pages Posted: 13 Nov 2023

See all articles by David Arnold

David Arnold

University of California, San Diego (UCSD)

Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Terry Moon

University of British Columbia

Amirhossein Tavakoli

University of British Columbia (UBC)

Date Written: November 2023

Abstract

This paper connects changes in employer characteristics through job transitions to employee earnings following mergers and acquisitions (M&As). Using firm balance sheet data linked to individual earnings data in Canada and a matched difference-in-differences design, we find that after M&As acquirers expand while targets shrink substantially relative to their matched control groups. Additionally, profit margins decrease for both acquirers and targets in the medium run. Furthermore, workers at target firms suffer losses in earnings, and this decline in earnings is entirely driven by workers who move to other firms after an M&A event. We find that workers leaving target firms after M&As move to larger firms with higher wage premiums, but with much worse match qualities on average. Taken together, it appears that job transitions to employers with poor match qualities primarily explain the post-M&A decline in worker earnings in our setting.

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Suggested Citation

Arnold, David and Milligan, Kevin S. and Moon, Terry and Tavakoli, Amirhossein, Job Transitions and Employee Earnings after Acquisitions: Linking Corporate and Worker Outcomes (November 2023). NBER Working Paper No. w31866, Available at SSRN: https://ssrn.com/abstract=4631043

David Arnold (Contact Author)

University of California, San Diego (UCSD) ( email )

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Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Terry Moon

University of British Columbia ( email )

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Amirhossein Tavakoli

University of British Columbia (UBC) ( email )

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