The Labor Market Consequences of Acquisitions

Jakob Beuschlein, Jósef Sigurdsson and Horng Wong

No 2576, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We study the effects of corporate acquisitions on workers using Swedish administrative data and document substantial, persistent earnings losses following acquisitions. These losses reflect both displacement and wage cuts among stayers from target firms. We find no evidence that increased monopsony power accounts for these wage cuts. Instead, they are concentrated in acquisitions where the acquiring-firm CEO sat on the board of the target prior to the transaction. Such acquisitions increase acquiring-firm profits and CEO pay, without affecting total employment or revenue, consistent with rent redistribution. Overall, acquisitions reduce wages and disrupt employment, with profit gains partly extracted from workers.

Keywords: Mergers and acquisitions; wages; layoffs; monopsony; firm performance; managers (search for similar items in EconPapers)
JEL-codes: G34 J23 J31 J42 J63 L25 (search for similar items in EconPapers)
Date: 2025-09
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