Impact of Mergers and Acquisitions on Unemployment: A Case of Indian Economy

Abstract

The mergers and acquisitions approval is focused on the product market mainly, but recently input market has also been considered in different jurisdictions. The study’s focal point was evaluating the impact of mergers and acquisitions on the unemployment rate in India. The secondary data was collected from CMIE. Data was collected on employment and mergers in manufacturing, service, mining, and real estate and construction industries from March 2016 to September 2020 quarterly for correlation analysis. Regression analysis was also conducted where the unemployment rate in India was dependent variable and number of acquisitions, value of acquisition, number of mergers, CPI, IIP, BSE Sensex trading volume, trade balance, central government expenditure were independent variables, where data was collected from January 2016 to November 2020 on monthly basis. The result indicated a negative and weak correlation between the mining and service industries mergers with the number of employees in the industries and positive yet weak correlation between manufacturing industry and real estate and construction industry mergers with the employment in the industry, but these results were insignificant. Regression analysis result deduced that number of acquisition, inflation, and trade balance had a positive yet insignificant impact on the unemployment rate in India, and acquisition value, number of mergers, IIP, BSE Sensex Trading volume, trade balance, and central government expenditure had a negative impact on the unemployment rate in India but insignificant, except IIP. Results indicate that volume of transactions and number of mergers and acquisitions had a distinctive impact on the unemployment level and industry specific research is required for the identification of oligopoly and oligopsony.