Low-Wage Workers and the Enforceability of Non-Compete Agreements
59 Pages Posted: 20 Sep 2019
Date Written: September 10, 2019
We exploit the 2008 Oregon ban on non-compete agreements (NCAs) for hourly-paid workers to provide the first evidence on the impact of NCA bans on the earnings of low-wage workers. We find that banning NCAs for hourly workers increased hourly wages by 2-3% on average. Scaling this estimate by the prevalence of NCA use in the population suggests that the effect on employees actually bound by NCAs may be as great as 14-21%, though the true effect is likely lower due to labor market spillovers. The positive wage effects are found across the age, education and wage distributions, though they are stronger in occupations where NCAs are more common. The Oregon low-wage NCA ban also raised monthly job-to-job mobility by 12-18%, increased the proportion of salaried workers, and decreased the probability of being unemployed, without affecting hours worked.
Keywords: Low-Wage Workers, Non-compete Agreements, Monopsony Power
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