Mobility Restrictions, Bargaining, and Wages: Evidence from the National Longitudinal Survey of Youth 1997

34 Pages Posted: 7 Dec 2021

See all articles by Donna S. Rothstein

Donna S. Rothstein

United States Bureau of Labor Statistics

Evan Starr

University of Maryland - Robert H. Smith School of Business

Date Written: November 30, 2021

Abstract

We examine the use of noncompete agreements (NCAs) and their relationship with wage bargaining and wage outcomes using new data from the National Longitudinal Survey of Youth 1997. NCAs cover 18% of the workers in our sample and adoption patterns are broadly consistent with prior research. The NCA-wage correlation is positive and highly sensitive to controls for demographics and job characteristics, suggesting selection into NCAs causes positive bias in the estimates. While it is not obvious what the baseline level of the NCA-wage differential is, some heterogeneous effects are more stable: the NCA-wage differential is lower for workers that do not bargain over wages, have less education, have lower ability, or live in a state that enforces NCAs. Notably, wage bargaining—which is only marginally more likely with NCAs in our most saturated model—does not explain the heterogeneous effects across subgroups. We discuss these findings in light of competing theories of the social value of NCAs, and describe future directions for research on NCAs as more waves of data are collected.

Keywords: Noncompete Agreements, Bargaining, Wages

JEL Classification: J31, J41, J42, K31

Suggested Citation

Rothstein, Donna S. and Starr, Evan, Mobility Restrictions, Bargaining, and Wages: Evidence from the National Longitudinal Survey of Youth 1997 (November 30, 2021). Available at SSRN: https://ssrn.com/abstract=3974897 or http://dx.doi.org/10.2139/ssrn.3974897

Donna S. Rothstein

United States Bureau of Labor Statistics ( email )

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Evan Starr (Contact Author)

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

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