Mergers and Acquisitions, Technological Change and Inequality

We document firm-level changes following mergers and acquisitions (M&As) which mirror aggregate shifts in the US labor market observed in response to greater use of automation. Specifically, we show post M&A establishments become less routine task intensive, more high-skilled, and pay more unequal wages. Besides the labor market outcomes, we show that investment in IT increases following M&As. The key channel that explains technology adoption following M&As is an increase in occupational scale that reduces the fixed cost of investing in technology. We also find suggestive evidence that agency and financial constraints may play a role towards explaining our findings