ANTI‐POACHING AGREEMENTS IN LABOR MARKETS

Oz Shy and Rune Stenbacka

Economic Inquiry, 2019, vol. 57, issue 1, 243-263

Abstract: We analyze competition for experienced workers among wage‐setting firms. The firms can design poaching offers with higher wages to workers who switch from rivals relative to wages paid to their own existing employees. We evaluate the profit and welfare effects of anti‐poaching agreements that eliminate poaching offers as a recruiting method. Anti‐poaching agreements increase industry profits, whereas workers are made worse off. We show that the effects of anti‐poaching agreements on total welfare are determined by the magnitude of workers' switching costs and the productivity change associated with switching employers. (JEL L41, L40, J42)

Date: 2019
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