Cross-Border Merger and Acquisition Activity and Wage Dynamics. (January 2021)

• Record Type: Journal Article
• Authors: Orefice, Gianluca; Sly, Nicholas; Toubal, Farid
• Is Part Of: Industrial and labor relations review. Volume 74:Number 1(2021)
• Page Start: 131
• Page End: 162
• Publication Date: 2021-01
• Subjects: cross-border M&A -- merger and acquisition -- wage dynamics -- in-kind payments -- fair wages -- multinational firms; Industrial relations -- Periodicals; 331.05
• DOI: 10.1177/0019793919839031
• Languages: English
• ISSNs: 0019-7939

Abstract

Using detailed administrative data that link French firms and workers over the years 2002 to 2007, the authors document declines in worker-level wages ahead of the time their employer is acquired by a foreign firm that are more than offset by gains in wages that emerge after cross-border acquisition. Specifically, relative wages fall by an estimated 7.5% in the years just before foreign acquisition, and they rise by approximately 12.5% in the years afterward. Changes in workers' earnings are evident in both wages and in-kind payments given to workers. Moreover, the authors provide theoretical foundations for the conditional mean independence assumption that underlies commonly applied empirical techniques.