Regional technological dynamism and noncompete clauses: evidence from a natural experiment
In this paper, we examine the causal impact of enforceable covenants not to compete (CNCs) on labor market matching and the technological dynamism of regions. Exploiting the fact that the Michigan Antitrust Reform Act (MARA) of 1985 inadvertently repealed Michigan' s prohibition on CNC enforcem...
| Main Authors: | , |
|---|---|
| Format: | Journal article |
| Language: | English |
| Published: |
Wiley
2016
|
| _version_ | 1797089159948533760 |
|---|---|
| author | Berger, T Frey, C |
| author_facet | Berger, T Frey, C |
| author_sort | Berger, T |
| collection | OXFORD |
| description | In this paper, we examine the causal impact of enforceable covenants not to compete (CNCs) on labor market matching and the technological dynamism of regions. Exploiting the fact that the Michigan Antitrust Reform Act (MARA) of 1985 inadvertently repealed Michigan' s prohibition on CNC enforcement, we show that technical professionals in Michigan became increasingly likely to switch industry relative to similar workers in other U.S. states after prohibition. Workers switching industries after the introduction of MARA also earned lower wages, implying that they shifted into technical fields where their skills from previous employment were less productive. Estimates further show that the technological dynamism of Michigan declined in tandem, as fewer workers shifted into new types of jobs associated with recent technological advances. These findings are consistent with the view that skilled professionals that are subject to CNCs are more likely to leave their field of work postemployment to avoid lawsuits. |
| first_indexed | 2024-03-07T03:00:26Z |
| format | Journal article |
| id | oxford-uuid:b0c9263e-5669-4bc1-b206-f2db352e9245 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T03:00:26Z |
| publishDate | 2016 |
| publisher | Wiley |
| record_format | dspace |
| spelling | oxford-uuid:b0c9263e-5669-4bc1-b206-f2db352e92452022-03-27T03:58:58ZRegional technological dynamism and noncompete clauses: evidence from a natural experimentJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:b0c9263e-5669-4bc1-b206-f2db352e9245EnglishSymplectic Elements at OxfordWiley2016Berger, TFrey, CIn this paper, we examine the causal impact of enforceable covenants not to compete (CNCs) on labor market matching and the technological dynamism of regions. Exploiting the fact that the Michigan Antitrust Reform Act (MARA) of 1985 inadvertently repealed Michigan' s prohibition on CNC enforcement, we show that technical professionals in Michigan became increasingly likely to switch industry relative to similar workers in other U.S. states after prohibition. Workers switching industries after the introduction of MARA also earned lower wages, implying that they shifted into technical fields where their skills from previous employment were less productive. Estimates further show that the technological dynamism of Michigan declined in tandem, as fewer workers shifted into new types of jobs associated with recent technological advances. These findings are consistent with the view that skilled professionals that are subject to CNCs are more likely to leave their field of work postemployment to avoid lawsuits. |
| spellingShingle | Berger, T Frey, C Regional technological dynamism and noncompete clauses: evidence from a natural experiment |
| title | Regional technological dynamism and noncompete clauses: evidence from a natural experiment |
| title_full | Regional technological dynamism and noncompete clauses: evidence from a natural experiment |
| title_fullStr | Regional technological dynamism and noncompete clauses: evidence from a natural experiment |
| title_full_unstemmed | Regional technological dynamism and noncompete clauses: evidence from a natural experiment |
| title_short | Regional technological dynamism and noncompete clauses: evidence from a natural experiment |
| title_sort | regional technological dynamism and noncompete clauses evidence from a natural experiment |
| work_keys_str_mv | AT bergert regionaltechnologicaldynamismandnoncompeteclausesevidencefromanaturalexperiment AT freyc regionaltechnologicaldynamismandnoncompeteclausesevidencefromanaturalexperiment |