The employment effects of mergers in a declining industry: the case of South African gold mining

Alberto Behar () and James Hodge

No 335, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: An industry in decline provides an appropriate setting for the theory that mergers and acquisitions destroy implicit contracts and allow for the shedding of excess labour. We test this theory using provincial data from the South African gold mining industry, which has been in decline over the last two decades. Our data clearly portray rises in real wages and falling employment after the end of apartheid and our econometric results are remarkably consistent with standard labour demand theory. We find evidence of a significant negative effect of mergers/acquisitions on employment of a magnitude similar to that found for Continental Europe. This supports the view that negative employment effects are more likely in rigid labour markets.

Keywords: Labour Demand; Mergers; Gold Industry (search for similar items in EconPapers)
JEL-codes: G34 J23 L72 (search for similar items in EconPapers)
Date: 2007-07-01
New Economics Papers: this item is included in nep-afr, nep-com and nep-dev
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Citations: View citations in EconPapers (3)

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Journal Article: The Employment Effects of Mergers in a Declining Industry: The Case of South African Gold Mining (2008)
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