RT Journal Article
SR Electronic
T1 Locked In? The Enforceability of Covenants Not to Compete and the Careers of High-Tech Workers
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 1218-9931R1
DO 10.3368/jhr.monopsony.1218-9931R1
A1 Balasubramanian, Natarajan
A1 Chang, Jin Woo
A1 Sakakibara, Mariko
A1 Sivadasan, Jagadeesh
A1 Starr, Evan
YR 2020
UL http://jhr.uwpress.org/content/early/2020/05/04/jhr.monopsony.1218-9931R1.abstract
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.