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The Impact of Non-Competes on Wages and Job Tenure: New Evidence from NLSY Data

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Abstract

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-in-difference design, we find a striking divergence: NCAs are associated with significantly slower wage growth for low-education workers over four years, but faster wage growth for high-education workers. Effects on job tenure are imprecisely estimated for both groups.

Suggested Citation

  • Bart Hobijn & Andre Kurmann & Tristan Potter, 2026. "The Impact of Non-Competes on Wages and Job Tenure: New Evidence from NLSY Data," Working Paper Series WP 2026-03, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:103280
    DOI: 10.21033/wp-2026-03
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    1. Arindrajit Dube & Daniele Girardi & Òscar Jordà & Alan M. Taylor, 2025. "A Local Projections Approach to Difference‐in‐Differences," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(7), pages 741-758, November.
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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