Mobility Constraint Externalities

• 成果类型: Article
• 署名作者: Starr, Evan; Frake, Justin; Agarwal, Rajshree
• 署名单位: University System of Maryland; University of Maryland College Park; University of Michigan System; University of Michigan
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.2018.1252
• 发表日期: 2019
• 页码: 961-980
• 关键词: Labor market frictions; mobility constraints; externalities; noncompetes

摘要

Covenants not to compete are often included in employment agreements between firms and employees, justified by each party's voluntary freedom to contract. However, noncompetes may also generate externalities for all individuals in the market, including those who have not signed such agreements. We theorize that enforceable noncompetes increase frictions in the labor market by increasing uncertainty and recruitment costs and by curtailing entrepreneurship. We find that in state-industry combinations with a higher incidence and enforceability of noncompetes, workers-including those unconstrained by noncompetes-receive relatively fewer job offers, have reduced mobility, and experience lower wages. The results offer policymakers a reason to restrict noncompetes beyond axiomatic appeals to a worker's freedom of contract and highlight labor market frictions that may impact firm-level human capital strategies.