An inquiry into the possible tradeoffs between antitrust enforcement and *employment

This research investigates the impact of U.S. federal antitrust enforcement on employment opportunities and wages for U.S. manufacturing workers from 1979--1999. This study is conducted on two levels. First, a case study approach is used to determine direct and deterrent effects from antitrust indictments on economic activities for six firms. Second, panel data analysis is employed to examine antitrust enforcement effects on industry employment (2-digit SIC code level) and wages for seven occupation groups. Antitrust law enforcement potentially can result in wage and job losses if generally efficient business practices are disrupted. While the aim of antitrust is not to attack efficiency, antitrust indictments may lead to negative labor market effects. A theory-based relationship between employment and antitrust enforcement is developed. Then, a panel dataset was created from the Trade Regulation Reporter, Annual Survey of Manufactures, Current Population Survey, and National Income and Product Accounts. Ten models are estimated using GLS procedures to control for nonspherical disturbances in the data. The resounding theme from these analyses is that antitrust enforcement does affect the labor market. A pattern emerging from the case studies is an immediate rise and subsequent decline in competitor employment once the antitrust indictment is issued. Corresponding with the results from the industry analysis, this could be an outcome of the competing firm maneuvering to improve its market position and competitiveness. The studies also provided evidence of lagged adverse employment effects occurring during and at the conclusion of the antitrust case. The industry analyses indicate that antitrust enforcement generally benefits employment. Employment increases persist two years beyond the initial indictment. However, the rate of increase does not. In most cases, employment growth surges one year after the indictment, but tapers off considerably. Additionally, high-wage workers who tend to possess specific human capital benefit the most from antitrust enforcement in terms of quantity and price, whereas low-wage workers who embody general human capital benefit the least. In summary, firms respond to antitrust enforcement in ways that ultimately affect both labor quantity and price. This dissertation provides evidence of employment and wage consequences derived from government intervention in the marketplace.