RT Journal Article
SR Electronic
T1 The Impacts of Restricting Mobility of Skilled Service Workers
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 1025
OP 1067
DO 10.3368/jhr.55.3.0617-8840R5
VO 55
IS 3
A1 Kurt Lavetti
A1 Carol Simon
A1 William D. White
YR 2020
UL http://jhr.uwpress.org/content/55/3/1025.abstract
AB Why do skilled services firms use noncompete agreements (NCAs), which prohibit workers from leaving firms and competing against them? We conduct a survey of physicians linking NCA use to labor-market outcomes and firm performance and show that by deterring poaching of patients NCAs increase the return to job tenure, with larger effects in states with more enforceable NCA laws. These effects are consistent with NCAs enabling practices to allocate clients to new physicians through intrafirm referrals, reducing a form of investment holdup. We discuss an array of supporting suggestive evidence, but also find NCAs provide some benefits by reducing job turnover.