Noncompete Clauses, Job Mobility, and Job Quality: Evidence from a Low-Earning Noncompete Ban in Austria

Young, Samuel G.

doi:10.2139/ssrn.3811459

Cited by 7 publications

(4 citation statements)

References 51 publications

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“…10 NCAs are also common for low-wage workers in other countries besides the USA. See Young (2021) for a discussion and an analysis of data for Austria. 11 Lipsitz and Starr (2021) also consider the implications of NCAs for occupational upgrading, the share of salaried workers, and weekly hours worked.…”

Section: Endnotesmentioning

confidence: 99%

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On the inefficiency of non‐competes in low‐wage labour markets

Potter,

Hobijn,

Kurmann

2024

Economica

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We study the efficiency of non‐compete agreements (NCAs) in an equilibrium model of labour turnover. The model is consistent with empirical studies showing that NCAs reduce turnover and average wages for low‐wage workers. The model also predicts that, by reducing turnover, NCAs raise recruitment and employment. We show that optimal NCA policy: (i) is characterized by a Hosios‐like condition that balances the benefits of higher employment against the costs of inefficient congestion and poaching; (ii) depends critically on the minimum wage; and (iii) alone cannot always achieve the constrained‐efficient allocation—a result that also holds for optimal minimum wage policy—yet with both policies, efficiency is always attainable. To guide policymakers, we derive a sufficient statistic in the form of an easily computed employment threshold above which NCAs are necessarily inefficiently restrictive, and show that employment levels in current low‐wage US labour markets typically exceed this threshold. Finally, we calibrate the model and show that Oregon's 2008 NCA ban for low‐wage workers increased welfare modestly (by roughly 0.1%), and that if policymakers had also raised the minimum wage to its optimal level conditional on the enacted NCA ban (a 30% increase), then welfare would have increased more substantially—by over 1%.

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Section: Endnotesmentioning

confidence: 99%

“…1010 NCAs are also common for low‐wage workers in other countries besides the USA. See Young (2021) for a discussion and an analysis of data for Austria.…”

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confidence: 99%

On the inefficiency of non‐competes in low‐wage labour markets

Potter,

Hobijn,

Kurmann

2024

Economica

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“…In Austria, before 2006 NCCs were enforceable for all adult employees. In 2006, the Austrian Parliament changed the legislation making NCCs not enforceable for employees who had signed their contract after March 2006 and whose earnings were below 2,100 euros 18 per month (Young, 2021).…”

Section: Nccs In the European Unionmentioning

confidence: 99%

Non-Compete Agreements in a Rigid Labour Market: The Case of Italy

2023

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“…9 NCAs are also common for low-wage workers in other countries besides the U.S. See Young (2021) for a discussion and an analysis of data for Austria. and low pay-about whether they are covered by NCAs (see discussion above), the reported prevalence of NCAs among low-wage and low-education workers almost certainly understates the true prevalence.…”

Section: Prevalence Of Ncasmentioning

confidence: 99%

On the Inefficiency of Non-Competes in Low-Wage Labor Markets

Potter¹,

Hobijn²,

Kurmann³

2021

ERWP

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We study the efficiency of non-compete agreements (NCAs) in an equilibrium model of labor turnover. The model is consistent with empirical studies showing that NCAs reduce turnover, average wages, and wage dispersion for low-wage workers. But the model also predicts that NCAs, by reducing turnover, raise recruitment and employment. We show that optimal NCA policy: (i) is characterized by a Hosios like condition that balances the benefits of higher employment against the costs of inefficient congestion and poaching; (ii) depends critically on the minimum wage, such that enforcing NCAs can be efficient with a sufficiently high minimum wage; and (iii) alone cannot always achieve efficiency, also true of a minimum wage-yet with both instruments efficiency is always attainable. To guide policy makers, we derive a sufficient statistic in the form of an easily computed employment threshold above which NCAs are necessarily inefficiently restrictive, and show that employment levels in current low-wage U.S. labor markets are typically above this threshold. Finally, we calibrate the model to show that Oregon's 2008 ban of NCAs for low-wage workers increased welfare, albeit modestly (by roughly 0.1%), and that if policy makers had also raised the minimum wage to its optimal level (a 30% increase), welfare would have increased more substantially-by over 1%.

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Noncompete Clauses, Job Mobility, and Job Quality: Evidence from a Low-Earning Noncompete Ban in Austria

Cited by 7 publications

References 51 publications

On the inefficiency of non‐competes in low‐wage labour markets

On the inefficiency of non‐competes in low‐wage labour markets

Non-Compete Agreements in a Rigid Labour Market: The Case of Italy

On the Inefficiency of Non-Competes in Low-Wage Labor Markets

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