The Effects of Noncompetes on Workers and Employers: Evidence from a Large Field Experiment

Noncompete agreements curtail workers' freedom to pursue better, higher-paying jobs by prohibiting them from joining or starting competing firms, often within temporally and geographically circumscribed limits. Research suggests that noncompetes cover about 20 percent of workers, and that 40 percent have ever signed one. However, causal evidence about the effects of noncompete agreements on worker outcomes is missing. Economists Evan Starr and Bo Cowgill will address this gap with a field experiment to measure the causal ​effect of noncompete clauses on the employment outcomes of workers. The study will seek to answer these questions: (1) How does the presence of a noncompete clause affect the composition of candidates willing to accept that job, at what starting wage, and how long does it take to fill a vacancy? (2) How do noncompetes affect workers' effort and job performance? (3) How does a prior noncompete change the rate at which workers will accept subsequent employment, and at what wage? (4) For whom are the effects the strongest? (i.e., women, those with more experience, etc.) (5) How does the transparency of the noncompete moderate the effects? (6) How does the public vs. private notice of the noncompete moderate the effects?