Noncompetes and Firm Heterogeneity - American Economic Association
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Home<br>Journals<br>AEA Papers and Proceedings<br>May 2026<br>Noncompetes and Firm Heterogeneity
AEA Papers and Proceedings
ISSN 2574-0768 (Print)<br>ISSN 2574-0776 (Online)
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About AEA Papers and ProceedingsEditors<br>Editorial Policy<br>Contact Information
Articles and IssuesCurrent Issue<br>All Issues
Information for AuthorsAccepted Article Guidelines<br>Style Guide
Noncompetes and Firm Heterogeneity
Axel Gottfries
Gregor Jarosch
AEA Papers and Proceedings
vol. 116,<br>May 2026
(pp. 262–266)
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Article Information
Abstract
Noncompetes often cover highly trained, high-paid workers but are also widespread in low-skill, low-pay service jobs. This paper asks where they hurt workers more. Using a dynamic monopsony job-ladder framework, we show that noncompetes depress wages by reducing competition, with potentially severe effects when adoption is widespread. The impact on wages is particularly adverse when they are used by firms with high productivity and high costs of training workers, as these are the firms with large rents. In contrast, the effects are more muted when low-rent employers use noncompetes.
Citation
Gottfries, Axel, and Gregor Jarosch.<br>2026.
"Noncompetes and Firm Heterogeneity."
AEA Papers and Proceedings
116:<br>262–266.
DOI: 10.1257/pandp.20261076
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JEL Classification
D24<br>Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
J23<br>Labor Demand
J31<br>Wage Level and Structure; Wage Differentials
J62<br>Job, Occupational, and Intergenerational Mobility; Promotion
J64<br>Unemployment: Models, Duration, Incidence, and Job Search
M51<br>Personnel Economics: Firm Employment Decisions; Promotions
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