Employment effects of mergers and acquisitions in the United States by sector

Abstract

This article studies the employment effects of mergers and acquisitions in the manufacturing, financial and service sectors of the US economy using annual time series data from 1978 to 2008. An empirical model is developed in which average wages per hour and the total value of mergers and acquisitions are the explanatory variables, with the number of people employed as the dependent variable. Before estimating the model, the time series properties of the data are diagnosed. The estimated results suggest that mergers and acquisitions have helped to increase employment in both the short-run as well as in the long-run in all three sectors of the economy. To ensure the robustness of the finding, a panel data set is created and the model is re-estimated using the fixed effects estimator. The finding is consistent with the sectoral results.