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Collective Bargaining and Monopsony: The Regulation of Noncompete Agreements in France

Author

Listed:
  • Boeri, Tito

    (Bocconi University)

  • Crescioli, Tommaso

    (Prometeia)

  • Garnero, Andrea

    (OECD)

  • Luisetto, Lorenzo

    (Cleveland State University)

Abstract

Can collective bargaining mitigate monopsony power? This paper addresses this question by examining how the regulation of noncompete agreements for employees by collective agreements affects firm-level markdowns in the French manufacturing sector. Using a staggered difference-in-differences approach, we find that the regulation of noncompetes set by collective agreements leads to a 1.3%-2.2% reduction in markdowns on average. The effect grows over time and is more pronounced for smaller, less productive firms that pay lower wages. Studying a landmark decision of the French Supreme Court that introduced the obligation to have a compensation to consider a noncompete enforceable, we find a significant complementarity between the regulation of noncompetes at the national level (e.g., via case law) and sectoral collective bargaining. By enhancing compliance or imposing further restrictions, collective bargaining can serve as an effective tool to regulate the use of noncompete agreements.

Suggested Citation

  • Boeri, Tito & Crescioli, Tommaso & Garnero, Andrea & Luisetto, Lorenzo, 2026. "Collective Bargaining and Monopsony: The Regulation of Noncompete Agreements in France," IZA Discussion Papers 18564, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18564
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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