PT  - JOURNAL ARTICLE
AU  - Natarajan Balasubramanian
AU  - Jin Woo Chang
AU  - Mariko Sakakibara
AU  - Jagadeesh Sivadasan
AU  - Evan Starr
TI  - Locked In? The Enforceability of Covenants Not to Compete and the Careers of High-Tech Workers
AID  - 10.3368/jhr.monopsony.1218-9931R1
DP  - 2020 May 12
TA  - Journal of Human Resources
PG  - 1218-9931R1
4099  - http://jhr.uwpress.org/content/early/2020/05/04/jhr.monopsony.1218-9931R1.short
4100  - http://jhr.uwpress.org/content/early/2020/05/04/jhr.monopsony.1218-9931R1.full
AB  - We study the relationship between the enforceability of covenants not to compete (CNCs) and employee mobility and wages. We exploit a 2015 CNC ban for technology workers in Hawaii and find that this ban increased mobility by 11% and new-hire wages by 4%. We supplement the Hawaii evaluation with a cross-state analysis using matched employer-employee data. We find that eight years after starting a job in an average-enforceability state, technology workers have about 8% fewer jobs and 4.6% lower cumulative earnings relative to equivalent workers starting in a non-enforcing state. These results are consistent with CNC enforceability increasing monopsony power.