Locked In? The Enforceability of Covenants Not to Compete and the Careers of High-Tech Workers

Natarajan Balasubramanian, Jin Woo Chang, Mariko Sakakibara, Jagadeesh Sivadasan and Evan Starr

Journal of Human Resources, 2022, vol. 57, issue S, s349-s396

Abstract: 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.

JEL-codes: J3 K12 L6 (search for similar items in EconPapers)
Date: 2022
Note: DOI: 10.3368/jhr.monopsony.1218-9931R1
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Citations: View citations in EconPapers (18)

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Working Paper: Locked In? The Enforceability of Covenants Not to Compete and the Careers of High-Tech Workers (2017)
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