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 S349
OP S396
DO 10.3368/jhr.monopsony.1218-9931R1
VO 57
IS S
A1 Balasubramanian, Natarajan
A1 Chang, Jin Woo
A1 Sakakibara, Mariko
A1 Sivadasan, Jagadeesh
A1 Starr, Evan
YR 2022
UL http://jhr.uwpress.org/content/57/S/S349.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 percent and new-hire wages by 4 percent. 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 percent fewer jobs and 4.6 percent lower cumulative earnings relative to equivalent workers starting in a nonenforcing state. These results are consistent with CNC enforceability increasing monopsony power.