Anti-Poaching Agreements in Labor Markets
41 Pages Posted: 25 Feb 2015 Last revised: 12 May 2018
Date Written: May 8, 2018
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: Suggested Citation