Ties That Bind but Pay: The Consequences of Noncompete Agreements on Compensation

We exploit the 2008 Oregon ban on noncompete agreements (NCAs) for hourly-paid workers to provide the first evidence on the impact of NCAs on low-wage workers. We find that banning NCAs for hourly workers increased hourly wages by 2%–3% on average. Since only a subset of workers sign NCAs, scaling this estimate by the prevalence of NCA use in the hourly-paid 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 onto those not bound by NCAs. Whereas the positive wage effects are found across the age, education, and wage distributions, they are stronger for female workers and in occupations where NCAs are more common. The Oregon low-wage NCA ban also improved average occupational status in Oregon, raised job-to-job mobility, and increased the proportion of salaried workers without affecting hours worked. This paper was accepted by Lamar Pierce, organizations.

Download Full-text

State enforceability of noncompete agreements: Regulations that stifle productivity!

Human Resource Management ◽

10.1002/hrm.21840 ◽

2017 ◽

Vol 57 (1) ◽

pp. 341-354 ◽

Cited By ~ 3

Author(s):

Smriti Anand ◽

Iftekhar Hasan ◽

Priyanka Sharma ◽

Haizhi Wang

Keyword(s):

Noncompete Agreements

Download Full-text

Physician Practice Organization and Negotiated Prices: Evidence from State Law Changes

American Economic Journal Applied Economics ◽

10.1257/app.20180078 ◽

2021 ◽

Vol 13 (2) ◽

pp. 258-296

Author(s):

Naomi Hausman ◽

Kurt Lavetti

Keyword(s):

Economies Of Scale ◽

State Level ◽

Organizational Structures ◽

Physician Practice ◽

Fixed Costs ◽

State Law ◽

Practice Organization ◽

Percent Increase ◽

Noncompete Agreements ◽

The Relationship

We study the relationship between physician organizational structures and prices negotiated with private insurers. Using variation caused by state-level judicial law changes, we show that a 10 percent increase in the enforceability of noncompete agreements (NCAs) causes 4.3 percent higher physician prices, and declines in practice sizes and concentration. Using two databases containing every physician establishment and firm between 1996 and 2007, linked to negotiated prices, we show that larger practices have lower prices for services with high fixed costs, consistent with economies of scale. In contrast, increases in firm concentration conditional on establishment concentration leads to higher prices. (JEL D24, G22, I11, J44, K22, L13)

Download Full-text