Abstract

https://ssrn.com/abstract=2625714
 


 



Noncompetes in the U.S. Labor Force


Evan P Starr


University of Maryland Robert H Smith School of Business

Norman Bishara


The Stephen M. Ross School of Business at the University of Michigan

J.J. Prescott


University of Michigan Law School

August 29, 2016


Abstract:     
As typically unobserved features of the employment relationship, the role that covenants not to compete play in shaping economic dynamics is intrinsically difficult to grasp. Using nationally representative survey data on 11,505 labor force participants, we characterize the use of noncompetes by employer and employee characteristics and document the labor market effects with which they are associated. We find that noncompetes are more likely to be found in high skill, high paying occupations, but that they are also prevalent in low skill, low paying occupations. We document that negotiation over noncompetes is rare and that firms regularly delay the offering of the noncompete until after the employee has accepted the job. In the cross-section, noncompetes are associated with both increased retention and redirection from competitors, as well as a greater likelihood of receiving training and higher wages. We find little role for the enforceability of the noncompete both in determining where noncompetes are used and the strength of the relationship between a noncompete and labor market outcomes.

Number of Pages in PDF File: 51

Keywords: noncompetes, non-competition agreements, covenants not to compete, employment law, contracts, cove


Open PDF in Browser Download This Paper

Date posted: July 3, 2015 ; Last revised: August 30, 2016

Suggested Citation

Starr, Evan P and Bishara, Norman and Prescott, J.J., Noncompetes in the U.S. Labor Force (August 29, 2016). Available at SSRN: https://ssrn.com/abstract=2625714

Contact Information

Evan P Starr
University of Maryland Robert H Smith School of Business ( email )
United States
(301) 405-2320 (Phone)
Norman D Bishara
The Stephen M. Ross School of Business at the University of Michigan ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-647-6823 (Phone)

J.J. Prescott (Contact Author)
University of Michigan Law School ( email )
3170 South Hall
701 S. State St.
Ann Arbor, MI 48109
United States
734-763-2326 (Phone)

Feedback to SSRN


Paper statistics
Abstract Views: 1,332
Downloads: 284
Download Rank: 83,692