Macroeconomics Seminar Series. "Dynamic Monopsony with Large Firms and Noncompetes" (with Gregor Jarosch)
Published: 7 October 2024
24 October 2024. Dr Axel Gottfries, University of Edinburgh
Dr Axel Gottfries, University of Edinburgh
"Dynamic Monopsony with Large Firms and Noncompetes" (with Gregor Jarosch)
Thursday, 24 October 2024. 15:00-16:30
Seminar Room 2 (G53), Kelvin Hall
Abstract
How do noncompete agreements between workers and firms affect wages and em- ployment in equilibrium? We build a tractable framework of wage posting with on-the-job search and large employers that provides a natural laboratory to assess anti-competitive practices in the labor market. We characterize the impact of market structure and show that noncompetes can sharply suppress wages. We validate the quantitative model with empirical evidence on the impact of mergers and noncompetes on employment and wages. Banning noncompetes in the US would raise wages by 4%. Wage gains are large when demand is inelastic, training costs are high, and when noncompetes are widespread.
Bio
Axel Gottfries is a reader in economics at University of Edinburgh. His research focuses on labor economics and macroeconomics.
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First published: 7 October 2024
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