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Employer Market Power in Silicon Valley

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  • Matthew Gibson

    (Williams College and IZA)

Abstract

Adam Smith alleged that employers often secretly combine to reduce labor earnings. This paper examines an important case of such behavior: illegal no-poaching agreements through which information-technology companies agreed not to compete for each other’s workers. Exploiting the plausibly exogenous timing of a U.S. Department of Justice investigation, I estimate the effects of these agreements using a difference-in-difference design. Data from Glassdoor permit the inclusion of rich employer- and job-level controls. On average the no-poaching agreements reduced salaries at colluding firms by 5.6 percent, consistent with considerable employer market power. Stock bonuses and job satisfaction were also negatively affected.

Suggested Citation

  • Matthew Gibson, 2024. "Employer Market Power in Silicon Valley," Upjohn Working Papers 24-398, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:24-398
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    More about this item

    Keywords

    No-poach agreement; employer market power; Silicon Valley; tech companies; Glassdoor; compensation;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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