Mergers and Labor Market Outcomes in the US Airline Industry

Abstract

This paper examines US airline mergers between 1993 and 2018 and studies their impact on the labor market. Our difference-in-differences estimates indicate a significant reduction in the merging airlines' long-term wage and fringe benefits following the mergers. The effect is particularly salient among large-scale mergers involving major airlines and low cost carriers. The results also suggest a negative short-term employment impact of mergers that varies by occupation types. Our findings are consistent with the impact of merger-induced monopsony power discussed in recent literature and offer important policy implications regarding how to account for employer monopsony power during mergers and acquisitions.