Ownership Change, Productivity, and Human Capital: New Evidence from Matched Employer-Employee Data

Empirical studies of the impact of changes in ownership of manufacturing plants on productivity (e.g., Lichtenberg and Siegel (1987, 1990a, 1990b), McGuckin and Nguyen (1995, 2001), and Maksimovic and Phillips (2001)) have provided limited evidence on how such transactions affect investment in human capital and have been based strictly on U.S. and U.K. data. We attempt to fill these gaps, based on an analysis of matched employer-employee data from over 19,000 Swedish manufacturing plants for the years 1985-1998. The sample covers virtually the entire population of manufacturing plants with 20 or more employees and a probability-based sample of smaller plants. We assess whether there are differential effects on productivity for different types of ownership changes, such as partial and full acquisitions and divestitures, and related and unrelated acquisitions. Our results suggest that ownership change results in an increase in relative productivity. This pattern emerges most strongly for full acquisitions and divestitures and unrelated acquisitions. We also find that plants involved in these transactions experience increases in average employee age, experience, and the percentage of employees with a college education. Ownership change also leads to an increase in earnings and a reduction in the percentage of female workers.