This paper argues that mergers and acquisitions (M&As) reduce inventors’ innovation incentives and outputs by increasing firms’ labor market power and limiting the rents inventors can capture. We develop a theoretical model to illustrate this mechanism and test its predictions using individual-level longitudinal data from the U.S. Census Bureau. We find that, at both target and acquiring firms, inventors exposed to greater increases in labor market concentration—particularly in already concentrated markets—produce fewer patents, earn lower wages, and exhibit reduced job mobility following mergers. In aggregate, the negative impact of increased labor market power on inventor productivity outweighs the potential benefits from innovation synergies. Overall, our findings highlight the critical role of labor market dynamics and inventor incentives in evaluating the innovation consequences of M&As.