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Cross-Border Mergers and Domestic Wages: Integrating Positive 'Spillover' Effects and Negative 'Bargaining' Effects

Clougherty, Joseph A. and Gugler, Klaus and Sørgard, Lars (2012) Cross-Border Mergers and Domestic Wages: Integrating Positive 'Spillover' Effects and Negative 'Bargaining' Effects. Department of Economics Working Paper Series, 136. WU Vienna University of Economics and Business, Vienna.

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Abstract

The existing literature concerning the impact of cross-border merger activity on domestic wages can be split into two camps: 1) those focusing on positive 'spillover' effects; 2) those focusing on negative 'bargaining' effects. Motivated in part by the lack of scholarship spanning these two literatures, we provide a theoretical model that nests these two mechanisms in one conceptual framework. From our theoretical model we are able to predict that 'spillover' effects tend to be more dominant under low unionization rates, while 'bargaining' effects tend to be more dominant under high unionization rates; furthermore, 'spillover' effects tend to be more dominant with inward cross-border mergers, while 'bargaining' effects tend to be more dominant with outward cross-border mergers. We employ comprehensive panel data on wages, unionization and merger activity for US industry sectors over the 1986-2001 period in order to test the impact of cross-border merger activity on domestic wages. We find support for our propositions in that higher unionization rates make it more likely that cross-border mergers generate wage decreases, while outward cross-border mergers more likely involve wage decreases than do inward cross-border mergers. (author's abstract)

Item Type: Paper
Keywords: international mergers / wages / unionisation / Mergers and Acquisations / Auswirkung / Lohnniveau / Gewerkschaft
Classification Codes: RVK QV 350 ; JEL L21, J31, F23
Divisions: Departments > Volkswirtschaft
Depositing User: Cécile Undreiner
Date Deposited: 23 Apr 2012 09:28
Last Modified: 11 Sep 2015 13:19
URI: http://epub.wu.ac.at/id/eprint/3512

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