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Foreign Acquisition, Wages and Productivity
Institute of Business and Technology and Aarhus School of Business, University of Aarhus, Denmark.
2011 (English)In: The World Economy, ISSN 0378-5920, E-ISSN 1467-9701, Vol. 34, no 6, 931-951 p.Article in journal (Refereed) Published
Abstract [en]

This paper studies the effect of foreign acquisition on wages and total factor productivity (TFP) in the years following a takeover by using unique detailed firm-level data for Sweden for the period 1993–2002. The paper takes particular account of potential endogeneity of the acquisition decision (for example, due to ‘cherry picking’) by implementing an instrumental variable approach and propensity score matching with difference-in-difference estimation. Moreover, in line with the recent literature on firm heterogeneity and trade, this paper allows for the acquisition effect to differ depending on whether the targeted firms were domestic multinational or non-multinationals before the foreign takeover. This paper also allows for the acquisition effect to differ depending on whether the acquisition is horizontal or vertical. Our results show that foreign acquisition has no effects on overall, skilled or less-skilled wage growth, either in targeted Swedish MNEs or in targeted Swedish non-MNEs or if the acquisition was motivated by vertical or horizontal motives. However, the results indicate that both targeted Swedish MNEs and non-MNEs have better growth in TFP after vertical foreign acquisition only but no such impact from horizontal foreign acquisition.

Place, publisher, year, edition, pages
Wiley-Blackwell, 2011. Vol. 34, no 6, 931-951 p.
National Category
URN: urn:nbn:se:liu:diva-114792DOI: 10.1111/j.1467-9701.2011.01345.xISI: 000292544100003OAI: diva2:792469
Available from: 2015-03-04 Created: 2015-03-04 Last updated: 2016-02-17Bibliographically approved

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Bandick, Roger
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