The impact of ownership changes: a view from labor markets

Previous studies of mergers and acquisition often focus on firms’ performance such as profits, productivity and market shares. However, from a broad competition policy perspective, the impacts on labor and wages are crucial. In this study, we use plant-level data for the entire US manufacturing sector for the period 1977–87 to examine the effects of ownership changes on employment, wages and plant closing. Our principal findings are that ownership changes are not a primary vehicle for cuts in employment and wages, or closing plants. Instead, the typical ownership change increases jobs and their quality as measured by wages. However, some ownership changes, particularly those in bigger plants, are associated with job loss, and the typical worker fares much worse than the typical plant. Finally, we find that plants that changed owners have a higher probability of survival than those that did not. Overall, the impact of ownership changes on labor markets are positive.