Anti-Poaching Agreements in Labor Markets

41 Pages Posted: 25 Feb 2015 Last revised: 12 May 2018

See all articles by Oz Shy

Oz Shy

Independent

Rune Stenbacka

Hanken School of Economics

Date Written: May 8, 2018

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.

Keywords: Anti-poaching agreements, wage competition, anticompetitive behavior, poaching offers, switching employers, labor mobility, productivity

JEL Classification: L41, L40, J42

Suggested Citation

Shy, Oz and Stenbacka, Rune, Anti-Poaching Agreements in Labor Markets (May 8, 2018). Available at SSRN: https://ssrn.com/abstract=2568943 or http://dx.doi.org/10.2139/ssrn.2568943

Oz Shy (Contact Author)

Independent ( email )

No Address Available

Rune Stenbacka

Hanken School of Economics ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+35 89 4313 3433 (Phone)
+35 89 4313 3382 (Fax)

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