American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Mergers, Foreign Competition, and Jobs: Evidence from the US Appliance Industry
American Economic Review
(pp. 2085–2119)
Abstract
Policy choices often create trade-offs between workers and consumers. I examine how foreign competition alters the consumer welfare and domestic employment effects of mergers. I construct a model incorporating consumer demand, endogenous product portfolios, and employment decisions. Applying the model to Whirlpool's acquisition of Maytag in the appliance industry, I compare the observed merger to a counterfactual acquisition by a foreign buyer. Although Whirlpool's acquisition decreased consumer welfare by $271 million annually, it preserved 797 domestic jobs. These jobs must therefore be valued at more than $344,000 per year for the domestic employment benefits to offset the consumer harm.Citation
Montag, Felix. 2026. "Mergers, Foreign Competition, and Jobs: Evidence from the US Appliance Industry." American Economic Review 116 (6): 2085–2119. DOI: 10.1257/aer.20230017Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- F23 Multinational Firms; International Business
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- J30 Wages, Compensation, and Labor Costs: General
- L13 Oligopoly and Other Imperfect Markets
- L68 Appliances; Furniture; Other Consumer Durables
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics