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Employer Market Power in Silicon Valley

Matthew Gibson

No 24-398, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: Adam Smith alleged that employers often secretly combine to reduce labor earnings. This paper examines an important case of such behavior: illegal no-poaching agreements through which information-technology companies agreed not to compete for each other’s workers. Exploiting the plausibly exogenous timing of a U.S. Department of Justice investigation, I estimate the effects of these agreements using a difference-in-difference design. Data from Glassdoor permit the inclusion of rich employer- and job-level controls. On average the no-poaching agreements reduced salaries at colluding firms by 5.6 percent, consistent with considerable employer market power. Stock bonuses and job satisfaction were also negatively affected.

Keywords: No-poach agreement; employer market power; Silicon Valley; tech companies; Glassdoor; compensation (search for similar items in EconPapers)
JEL-codes: J42 K21 K42 L41 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-com, nep-ict, nep-law, nep-lma and nep-reg
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