Abstract
Non-compete agreements (NCA) are contracts between employers and employees that restrict the former from leaving their job to work for or start a competing firm. As such, NCAs reduce labor mobility, and ultimately entrepreneurship, by imposing transactions costs on employees who want to change jobs or start a new venture. We contribute to a nascent literature examining the economic consequences of NCAs by considering how weakening the enforceability of NCAs is an external enabler of high-growth entrepreneurship (HGE). We show that such institutional changes enable HGE through three mechanisms: compression, conservation, and resource expansion. We empirically test and find supporting evidence using a large nested panel dataset and novel econometric method, staggered difference-in-differences. The causal effect of reducing NCA enforceability is economically and statistically significant.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
