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Cross-border mergers and domestic-firm wages: Integrating ‘spillover effects’ and ‘bargaining effects’

Joseph Clougherty (), Klaus Gugler (), Lars Sørgard () and Florian Szücs ()

No 9863, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Two literatures exist concerning cross-border merger activity’s impact on domestic wages: one focusing on spillover-effects; the other focusing on bargaining-effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, we predict that ‘bargaining’ (‘spillover’) effects are relatively more dominant under high (low) unionization rates and under high (low) degrees of relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is best characterized as related.

Keywords: bargaining; Cross-Border Mergers; FDI; spillovers; wages (search for similar items in EconPapers)
JEL-codes: F23 F66 J30 L21 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-cse, nep-int and nep-lab
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