Noncompete agreements in a rigid labor market: the case of Italy

Abstract

Abstract Noncompete agreements limiting the mobility of workers have been found to be widespread in the United States, a flexible and lightly regulated labor market. We explore the use of noncompete agreements in a rigid and highly regulated labor market, where labor mobility is low, and the labor market is highly regulated via legislation and collective bargaining. Based on a novel survey of Italian workers and an analysis of the regulatory framework, our study shows how trends and patterns in the use of noncompete agreements are not specific to a flexible labor market. Even in a rigid and highly regulated labor market, noncompete agreements are widespread, and often do not comply with the minimum legal requirements, and yet workers are not aware of their enforceability. This suggests that institutions and labor market regulations are not enough per se, especially when targeted groups are not properly informed, and incentives to comply are minimal.