Mergers and Acquisitions, Technological Change and Inequality

Mergers and Acquisitions, Technological Change and Inequality

Wenting Ma, Paige Ouimet, Elena Simintzi

Series number :

Serial Number: 
485/2016

Date posted :

March 12 2018

Last revised :

August 30 2018
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Keywords

  • Mergers • 
  • technological change • 
  • inequality

We document important shifts in occupational composition following merger and acquisition (M&A) activity as well as increases in average wages and wage inequality. We propose M&As act as a catalyst for technological change.

We argue that due to an increase in scale, improved efficiency or lower financial constraints, M&As facilitate technology adoption and automation, disproportionately increasing the productivity of high-skill workers and enabling the displacement of occupations involved in routine-tasks, typically mid-income occupations. An M&A event is associated with a 4.4% reduction in establishment routine share intensity and a 1.3% increase in the share of high skill workers at the target as compared to a matched sample of control establishments. We also observe higher hourly wages for the remaining workers in the establishment and an increase in wage polarization. Our results are generalized at the macro level as we are able to replicate similar patterns industry-wide.

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Authors

Real name: 
Wenting Ma
Real name: 
Paige Ouimet
Real name:
Elena Simintzi
UBC Sauder