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Cross-Border M&A Activity and Wage Dynamics

Author

Listed:
  • Farid Toubal

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CEPR - Center for Economic Policy Research)

  • Nicholas Sly

    (CESifo - LMU - Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München)

  • Gianluca Orefice

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

Using detailed administrative data that link French firms and workers over the years 2002 to 2007, the authors document declines in worker-level wages ahead of the time their employer is acquired by a foreign firm that are more than offset by gains in wages that emerge after cross-border acquisition. Specifically, relative wages fall by an estimated 7.5% in the years just before foreign acquisition, and they rise by approximately 12.5% in the years afterward. Changes in workers' earnings are evident in both wages and in-kind payments given to workers. Moreover, the authors provide theoretical foundations for the conditional mean independence assumption that underlies commonly applied empirical techniques.

Suggested Citation

  • Farid Toubal & Nicholas Sly & Gianluca Orefice, 2021. "Cross-Border M&A Activity and Wage Dynamics," Post-Print hal-03355778, HAL.
    • Handle: RePEc:hal:journl:hal-03355778
    DOI: 10.1177/0019793919839031
    as

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