Employment growth following takeovers

We construct a comprehensive sample of takeovers in Belgium that shows they are remarkably common. Takeovers involve both small and large firms and, over a five-year period, 17% of private sector employment. We estimate their impact on employment growth using a framework that explicitly takes into account that takeovers involve pairs of firms and that post-merger outcomes are heterogeneous. The average merger temporarily reduces employment of the combined entity by -1.4%. Mergers likely to be motivated by market power show a stronger and permanent employment reduction of -14%, whereas those motivated by efficiency gains lead to employment expansions of +10%.