Non-compete agreements actually lead to way faster raises for highly educated workers.
While policy experts generally view non-competes as a tool to suppress wages, this study finds a sharp divergence: they hurt low-education workers but help high-education ones. This suggests that for specialized professionals, these contracts might actually encourage firms to invest more heavily in their training and career progression.
The Impact of Non-Competes on Wages and Job Tenure: New Evidence from NLSY Data
SSRN · 6459381
Non-compete agreements (NCAs) are pervasive even in low-wage labor markets, yet most evidence relies on variation in enforceability rather than NCA incidence. Using longitudinal data from the NLSY97, we study how signing an NCA affects wage trajectories and job tenure. Exploiting complete work histories and applying a clean-controls local projections difference-indifference design, we find a striking divergence: NCAs are associated with significantly slower wage growth for loweducation workers o