1. The Impact of Restricting Labor Mobility on Corporate Investment and Entrepreneurship.
- Author
-
Jeffers, Jessica S
- Subjects
LABOR mobility ,CORPORATE investments ,COVENANTS not to compete ,CORPORATIONS ,ECONOMIC competition ,BARRIERS to entry (Industrial organization) ,NEW business enterprises - Abstract
This paper examines how labor mobility restrictions like noncompete agreements affect firms' investment decisions. Using matched employee-employer data from LinkedIn, I show that increases in the enforceability of noncompete agreements lead to widespread declines in employee departures, specifically in knowledge-intensive occupations. Established firms that rely more on these knowledge-intensive occupations increase their investment rate in physical capital. However, new firm entry in corresponding sectors declines. I provide evidence for different mechanisms to explain these patterns. Together, the findings show that labor frictions play an important role in investment decisions. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]
- Published
- 2024
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