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Employment growth following takeovers
Author(s) -
Geurts Karen,
Van Biesebroeck Johannes
Publication year - 2019
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12300
Subject(s) - sample (material) , construct (python library) , labour economics , market power , business , power (physics) , economics , private sector , large sample , market economy , economic growth , chemistry , physics , statistics , mathematics , chromatography , quantum mechanics , computer science , monopoly , programming language
We construct a comprehensive sample of takeovers in Belgium that shows they are remarkably common. Takeovers involve both small and large firms and, over a five‐year period, 17% of private sector employment. We estimate their impact on employment growth using a framework that explicitly takes into account that takeovers involve pairs of firms and that post‐merger outcomes are heterogeneous. The average merger temporarily reduces employment of the combined entity by −1.4%. Mergers likely to be motivated by market power show a stronger and permanent employment reduction of −14%, whereas those motivated by efficiency gains lead to employment expansions of +10%.