The Value of Employee Retention: Evidence from a Natural Experiment

26 Pages Posted: 20 Jul 2016

See all articles by Kenneth A. Younge

Kenneth A. Younge

Ecole Polytechnique Fédérale de Lausanne

Matt Marx

Boston University Questrom School of Business

Date Written: Fall 2016

Abstract

We estimate the firm‐level returns to retaining employees using difference‐in‐differences analysis and a natural experiment where the enforcement of employee noncompete agreements was inadvertently reversed in Michigan. We find that noncompete enforcement boosted the short‐term value of publicly traded companies by approximately 9%. The effect is increasing in local competition and growth opportunities, and offset by patenting.

Suggested Citation

Younge, Kenneth A. and Marx, Matt, The Value of Employee Retention: Evidence from a Natural Experiment (Fall 2016). Journal of Economics & Management Strategy, Vol. 25, Issue 3, pp. 652-677, 2016. Available at SSRN: https://ssrn.com/abstract=2811926 or http://dx.doi.org/10.1111/jems.12154

Kenneth A. Younge (Contact Author)

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
1015 Lausanne
Switzerland

Matt Marx

Boston University Questrom School of Business ( email )

595 Commonwealth Ave
Boston, MA 02466
United States

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