Labor Market Competition and the Political Economy
Saturday, Jan. 7, 2023 10:15 AM - 12:15 PM (CST)
- Chair: Sydnee Caldwell, Microsoft Research
Do Firms Value Court Enforcement of Noncompete Agreements? A Revealed Preference Approach
AbstractWe study the extent to which firms value the legal enforceability of noncompete agreements (NCAs) by examining state laws that established wage thresholds below which non-competes were unenforceable. If firms value the ability to enforce NCAs in court, as suggested by efficient contracting theories, then the discontinuity in NCA enforceability at a specific wage threshold should encourage the firm to take workers earning just below the threshold and raise their wages up to the threshold after the law is passed. Using job posting data and administrative data with difference-in-difference designs, our main results suggest that firms do not value the enforceability of NCAs for workers earning either $13 an hour or $100k per year, including even in high-tech industries where efficiency arguments related to NCAs are stronger. These results are consistent with arguments in which firms value the in terrorem effect of NCAs--regardless of what the law is--are suggestive of the value of other tools that firms already have to protect the same interests.
The Labor Demand Side of Involuntary Part-time Employment
AbstractInvoluntary part-time employment is a measure of labor market slack that goes beyond the unemployment rate and broadens our understanding of the state of the labor market. Our study examines the determinants of involuntary part-time employment rates by accounting for both supply and demand channels of the labor market. We investigate the role of labor demand by focusing on job vacancies, and labor supply by focusing on unemployment. We use big data on the near universe of online job vacancies collected by Burning Glass Technologies, and the Current Population Survey from 2003 to 2021. We find that, within the commuting zone by 6-digit SOC cell, a ten percent increase in unemployment rate increases the share of involuntary part-time rate by 0.22 percentage points, while a ten percent increase in job vacancies decreases the share of involuntary part-time rate by 0.06 percentage points. Overall, we conclude that higher labor supply and lower labor demand increase involuntary part-time employment. We also provide suggestive evidence that labor market power as measured by labor market concentration may additionally increase involuntary part-time employment. Our study shows that workers are more likely to have their preferred work hours when there are more employers that they can work for.
The Dynamics of Power in Labor Markets: Monopolistic Unions versus Monopsonistic Employers
AbstractThis paper brings together the modern research on employer power and employee power by empirically examining the effects of unionization on worker earnings, employment, and inequality across differently concentrated markets. Exploiting national tax reforms to union membership dues as exogenous shocks to union density, we show that high levels of unionization mitigate the negative wage and employment effects generated by imperfect competition. We also identify considerable effect heterogeneity with respect to worker types across differentially concentrated markets, and show that this has major implications for the role of unions in shaping labor market wage inequality.
- J4 - Particular Labor Markets
- J2 - Demand and Supply of Labor