Labor Demand Similarity and Mergers and Acquisitions: Evidence From 3 Million Job Postings

Using a job-posting-based measure of labor market competition, we show that firms tend to acquire companies that are their labor market competitors. Cross-sectional evidence indicates that these acquisitions are more likely in industries with similar corporate cultures, more binding noncompete agreements, and among firms that are not rivals in the product market. Using a quasi-experiment, we find that employee perceptions of compensation and career outlooks are negatively affected following a merger between labor market competitors. This suggests that such mergers reduce labor welfare by altering the competitive environment.