Ownership Change, Productivity, and Human Capital: New Evidence from Matched Employer-Employee Data

76 Pages Posted: 11 May 2006

See all articles by Donald S. Siegel

Donald S. Siegel

Arizona State University

Kenneth L. Simons

Rensselaer Polytechnic Institute (RPI) - Department of Economics

Tomas Lindstrom

The Riksbank

Date Written: April 2006

Abstract

Empirical studies of the impact of changes in ownership of manufacturing plants on productivity (e.g., Lichtenberg and Siegel (1987, 1990a, 1990b), McGuckin and Nguyen (1995, 2001), and Maksimovic and Phillips (2001)) have provided limited evidence on how such transactions affect investment in human capital and have been based strictly on U.S. and U.K. data. We attempt to fill these gaps, based on an analysis of matched employer-employee data from over 19,000 Swedish manufacturing plants for the years 1985-1998. The sample covers virtually the entire population of manufacturing plants with 20 or more employees and a probability-based sample of smaller plants. We assess whether there are differential effects on productivity for different types of ownership changes, such as partial and full acquisitions and divestitures, and related and unrelated acquisitions.

Our results suggest that ownership change results in an increase in relative productivity. This pattern emerges most strongly for full acquisitions and divestitures and unrelated acquisitions. We also find that plants involved in these transactions experience increases in average employee age, experience, and the percentage of employees with a college education. Ownership change also leads to an increase in earnings and a reduction in the percentage of female workers.

Keywords: Mergers and Acquisitions, Total Factor Productivity (TFP), Human Capital

JEL Classification: G34, D24, C81

Suggested Citation

Siegel, Donald S. and Simons, Kenneth L. and Lindstrom, Tomas, Ownership Change, Productivity, and Human Capital: New Evidence from Matched Employer-Employee Data (April 2006). Available at SSRN: https://ssrn.com/abstract=900527 or http://dx.doi.org/10.2139/ssrn.900527

Donald S. Siegel (Contact Author)

Arizona State University ( email )

411 North Central
Phoenix, AZ 85004
United States
6024961101 (Phone)

Kenneth L. Simons

Rensselaer Polytechnic Institute (RPI) - Department of Economics ( email )

110 8th Street
Troy, NY 12180
United States
518-276-3296 (Phone)
518-276-2235 (Fax)

HOME PAGE: http://www.rpi.edu/~simonk/

Tomas Lindstrom

The Riksbank ( email )

Monetary Policy Department
Brunkebergstorg 11
Stockholm, 103 37
Sweden

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