Acquiring Labor

Paige Ouimet and Rebecca Zarutskie

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We present evidence that some firms pursue M&A activity with the objective of obtaining a larger workforce. Firms most likely to be acquired for their large labor force, firms with the largest ex ante employment, are associated with more positive post-merger employment outcomes. Moreover, we find this relation is strongest when acquiring labor outside of an M&A is likely to be most difficult, due to tight labor conditions, or most valuable, in high human capital industries. We further find that high employment target firms are associated with relatively greater post-merger wage increases and lower post-merger employee turnover. We find no evidence that the positive relation between target ex ante employment and ex post employment change is driven by target asset size, market capitalization, industry, profitability or acquirer characteristics. Our findings do not exclude the possibility that a different subset of M&A activity may be motivated to penalize managers who have tolerated over-employment. Indeed, we find evidence consistent with this disciplinary motivation when considering acquisitions of targets in declining industries.

Pages: 50 pages
Date: 2011-10
New Economics Papers: this item is included in nep-cis, nep-com, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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https://www2.census.gov/ces/wp/2011/CES-WP-11-32.pdf First version, 2011 (application/pdf)

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Journal Article: Acquiring Labor (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:11-32

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