The Value of Employee Retention: Evidence From a Natural Experiment

Kenneth A. Younge and Matt Marx

Journal of Economics & Management Strategy, 2016, vol. 25, issue 3, 652-677

Abstract: We estimate the firm‐level returns to retaining employees using difference‐in‐differences analysis and a natural experiment where the enforcement of employee noncompete agreements was inadvertently reversed in Michigan. We find that noncompete enforcement boosted the short‐term value of publicly traded companies by approximately 9%. The effect is increasing in local competition and growth opportunities, and offset by patenting.

Date: 2016
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