How Do Mergers Affect the Mental Health of Employees?

We study employee mental health to assess the long-term, non-monetary consequences of mergers. Using employer-employee level data linked to individual health records, we document that the incidence of stress, anxiety, depression, and psychiatric medication usage increase following mergers. These effects are prevalent among employees from both targets and acquirers, in weak as well as in growing, profitable firms. Employees who experience negative career developments within the merging firms, "blue-collar" workers, and employees with lower skills are most affected. Mergers that generate more mental illness among employees perform worse after the transaction. A variety of tests address endogeneity concerns.