6 Comments

The solution is clearly for the FTC to only institute a noncompete ban on New Jersey, and then run a diff-in-diff comparing it with PA around their border.

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Perfect plan

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Great read, I always appreciate how clearly you communicate uncertainty. What do you think about other contractual arrangements like end of year, performance or retention bonuses? To me they seem like reasonably substitutes to encourage mutual investment by the employer/employee. Intuitively, I also find their reliance on prices more elegant than restrictive covenants like noncompetes.

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Thanks so much. I think we will see firms move to them more. Absolutely. It's one of the margins they will be able to adjust on that will reduce the harms of a ban. I like them because it's a clear transfer. If this rigidity is beneficial to the firm, they pay. Noncompetes are weird since we don't directly see how valuable they are to the firm and whether that is higher than the cost to the worker.

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If the US did a national ban on noncompete it would still be possible for legislators to create specific circumstances where they were allowed in the future. The ban wouldn't have to be 100% the final word. Obviously the military will get some kind of an exemption right of the bat.

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Yes, Congress could tell the FTC no. I don’t see them taking action. The states couldn’t.

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