The Effect of Takeovers on the Employment and Wages of Central-Office and Other Personnel

Frank Lichtenberg, Donald Siegel

NBER Working Paper No. 2895 (Also Reprint No. r1539)
Issued in March 1989
NBER Program(s):Labor Studies

This paper presents evidence based on establishment-level Census Bureau data concerning the effects of ownership change on the employment and wages of both central-office workers and manufacturing plant employees. We find that central offices that changed owners between 1977 and 1982 had substantially lower -- about 16% lower -- employment growth during that period than central offices not changing owners. (There was, however, no significant difference in the growth of R&D employment.) In contrast, employment growth in production establishments changing owners was only 5% lower than it was in production establishments not changing owners. (The relative employment decline in production establishments changing owners occurred in the 2 or 3 years before the takeover; after the takeover, employment recovered a bit, but not enough to offset the previous decline.) This implies that the ratio of central-office to plant employees declines about 11% in firms changing owners: about 7.2 administrators per 1000 plant employees are eliminated. These findings are consistent with the view that reduction of administrative overhead is an important motive for changes in ownership. Failure to account for reductions in central-office employment results in a substantial (about 40%) underestimate of the productivity gains associated with ownership change. We also provide evidence concerning the relationship between firm size and administrative-intensity.

download in pdf format
   (1346 K)

download in djvu format
   (360 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2895

Published: "The Effect of Ownership Change on the Employment and Wages of Central-Office and Other Personnel," Journal of Law and Economics, Vol. XXXIII, pp. 383-408, (October 1990).

Users who downloaded this paper also downloaded* these:
Brown and Medoff The Impact of Firm Acquisitions on Labor
Siegel and Griliches w3678 Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing
Siegel w3935 Errors in Output Deflators Revisited: Unit Values and the PPI
Lichtenberg and Siegel w2901 The Impact of R&D Investment On Productivity - New Evidence Using Linked R&D-LRD Data
Lichtenberg and Siegel w3022 The Effects of Leveraged Buyouts on Productivity and Related Aspects of Firm Behavior
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us