Employment Restrictions on Resource Transferability and Value Appropriation from Employees

58 Pages Posted: 8 Apr 2021 Last revised: 18 Jan 2024

See all articles by Natarajan Balasubramanian

Natarajan Balasubramanian

Syracuse University - Whitman School of Management

Evan Starr

University of Maryland - Robert H. Smith School of Business

Shotaro Yamaguchi

University of Maryland - Robert H. Smith School of Business

Date Written: January 16, 2024

Abstract

We examine the joint adoption of four employment restrictions that limit firm resource outflows—non-disclosure, non-solicitation, non-recruitment, and non-compete agreements—and their associations with value appropriation from employees. Using novel individual- and firm-level survey data, we find that when firms adopt restrictions, they tend to adopt either all four restrictions or only a non-disclosure agreement. Adoption of all restrictions is more likely when workers have access to valuable resources, non-competes are more enforceable, and states adopt the inevitable disclosure doctrine. Employees with all restrictions earn 5.4% less than employees with only non-disclosures, with this effect being driven by workers with low bargaining power. Analyses of earnings and a single restriction (e.g., only non-competes) yield opposite results from those considering joint adoption, likely because of selection.

Keywords: Employment Restrictions, Value Appropriation, Bargaining Power, Bundling

JEL Classification: J31, J41, J42, K31

Suggested Citation

Balasubramanian, Natarajan and Starr, Evan and Yamaguchi, Shotaro, Employment Restrictions on Resource Transferability and Value Appropriation from Employees (January 16, 2024). Available at SSRN: https://ssrn.com/abstract=3814403 or http://dx.doi.org/10.2139/ssrn.3814403

Natarajan Balasubramanian

Syracuse University - Whitman School of Management ( email )

United States

Evan Starr (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

Shotaro Yamaguchi

University of Maryland - Robert H. Smith School of Business ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
972
Abstract Views
4,917
Rank
44,231
PlumX Metrics