Workers, Unions, and Takeovers

How do takeovers affect workers’ wages and job security in the short-run? What role does the labor union play in mitigating
these effects? I answer these two questions by analyzing wage and employment outcomes of over 4,000 public firms that were
acquired between 1981 and 2002, using establishment-level data from the U.S. Census Bureau. I find that target establishments
exhibit a net contraction in wages and employment, relative to comparable establishments after takeovers. Targets’ establishments
in more unionized industries experience worse wage and employment outcomes after takeovers. These adverse effects are exacerbated
when the establishment is located in a state with Right-to-work laws where unions face a less favorable bargaining environment.
These findings indicate that target firms’ employees are negatively affected by takeovers and that their labor unions do not
mitigate these negative effects.