Directing the Labor Market: The Impact of Shared Board Members on Employee Flows

Abstract

Using resume data on over 20 million U.S. workers, we find that the flow of employees between a pair of firms sharply drops by about 20% when the firms start to share a director on their boards. We find no trend prior to initiation, and the reduced flow persists throughout the overlapping period. This relationship is stronger in settings where firms are more likely to benefit from lower competition for each other’s employees and is most pronounced for higher-skilled employees. The results suggest that shared directors facilitate cooperative behavior in the labor market.

Keywords: Board Overlap, Employment Flows, Monopsony, Collusion

JEL Classification: G34, G38, J42, J62, J08, K21, K31, M50