Skip to main content

Research Repository

Advanced Search

Impact of Economic Efficiency on Employment: A Case Study of Mergers and Acquisitions

Chirita, Anca Daniela

Impact of Economic Efficiency on Employment: A Case Study of Mergers and Acquisitions Thumbnail


Authors



Abstract

The paper challenges the present rhetoric used by competition policy makers and enforcers when advancing economic efficiency based on the assumption that promoting efficiency will help inefficient market players to leave the market. However, an exit of larger or smaller businesses is always associated with their downsizing or restructuring and, as a result, with job losses. The dogmatic application of competition policy serving economic calculus, rather than the social order, disregards the negative impact of competition on wages and employment. Revisiting the classical price and wage efficiency theoretic assumptions, the paper challenges the use of the efficiency benchmark at micro- (industrial organization) and macroeconomic levels. The case study of mergers & acquisitions (M&A) across several sectors of the economy will be used to demonstrate how internal growth and merger-specific efficiencies (some of which include the elimination of labour costs) impact wage efficiency and employment. While 6.5% of 3.7 million jobs losses as a result of M&A activity during a five year period does not seem to create a major macroeconomic imbalance, a closer look at recent M&A trends during 2013-2016 demonstrates that, indeed, jobs losses far outweigh the balance of job creation. Finally, the paper seeks to challenge the assumption that ‘new jobs replace old jobs’ following a successful merger. This is at odds with the fact that the majority of EU mergers are approved, even if subject to conditions, leaving an insignificant percentage of mergers blocked since 1990 (24 or 0.3%).

Citation

Chirita, A. D. (2016, October). Impact of Economic Efficiency on Employment: A Case Study of Mergers and Acquisitions. Paper presented at 82nd International Atlantic Economic Society Conference., Washington, DC, USA

Presentation Conference Type Conference Paper (unpublished)
Conference Name 82nd International Atlantic Economic Society Conference.
Conference Location Washington, DC, USA
Start Date Oct 13, 2016
End Date Oct 16, 2016
Online Publication Date Oct 15, 2016
Publication Date Oct 15, 2016
Deposit Date May 18, 2016
Publicly Available Date Mar 28, 2024
Publisher URL https://iaes.confex.com/iaes/82am/webprogram/Paper12759.html
Related Public URLs http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2838756
Additional Information Conference dates: 13-16 October 2016

Files




You might also like



Downloadable Citations