Job Transitions and Employee Earnings After Acquisitions: Linking Corporate and Worker Outcomes

Category: Finance Seminar
When: 18 June 2024
, 12:00
 - 13:15
Where: HoF E.01
Speaker: Terry S. Moon (University of British Columbia)

(joint with David Arnold, Kevin Milligan and Amirhossein Tavakoli)


This paper connects changes in employer characteristics through job transitions to employee earnings following mergers and acquisitions (M&As). Using firm balance sheet data linked to individual earnings data in Canada and a matched difference-in-differences design, we find that after M&As acquirers expand while targets shrink substantially relative to their matched control groups. Furthermore, workers at target firms suffer losses in earnings, and this decline in earnings is largely driven by workers who move to other firms after an M&A event. We find that workers leaving target firms after M&As move to larger firms with higher wage premiums, but still experience a wage decline potentially due to a loss of firm-specific human capital or backloaded contracts. It appears that job transitions and a subsequent loss of match-specific premiums primarily explain the post-M&A decline in worker earnings in our setting.