Evaluating the Effects of Mergers and Acquisitions on Employees: Evidence from Matched Employer-Employee Data

The unit of analysis in empirical studies of the employment and wage effects of mergers and acquisitions is typically the plant or firm. In contrast, the unit of observation in this study is the individual worker, which allows us to provide direct, systematic empirical evidence on the effects of different types of mergers and acquisitions on employees. Specifically, we analyze linked employer employee data for the entire population of Swedish workers and over 19,000 manufacturing plants for the period 1985-1998. For each worker, we have data on gender, age, national origin, level of education, type of education, location, industrial sector, annual earnings, as well as each employee’s complete work history both before and after a merger or acquisition. We can also identify whether the plant was involved in a full or partial acquisition or divestiture, as well as a related or unrelated acquisition. The empirical evidence suggests that employee outcomes are more favorable when only part of the company is bought or sold or when the firm engages in an unrelated acquisition.