2020/05/12 by Matthew S. Johnson, Michael Lipsitz · 40 citations
Economics, Econometrics and Finance · Social Sciences · #Commission #Economic growth #Economics #Global trade and economics #Labor Movements and Unions #Labor market dynamics and wage inequality #Labour economics #Law #Political science #Public policy #Sociology #Wage
paper · doi:10.3368/jhr.57.3.0619-10274r2
published in The Journal of Human Resources 57(3), 689-724 (University of Wisconsin Press)
openalex publication_date 2020/05/12 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
Policymakers are concerned by evidence that noncompete agreements (NCAs) are widely used in low-wage jobs. We show that firms that would otherwise not use NCAs are induced to use one in the presence of frictions to adjusting wages downward. Using a new survey of salon owners, we find that declines in the terms of trade for employees and increases in the minimum wage lead to higher NCA use, but only at firms for which the employee's cost of an NCA likely exceeds the employer's benefit. Furthermore, minimum wage increases have a negative effect on employment only where NCAs are unenforceable.