Noncompete Clauses, Job Mobility, and Job Quality: Evidence from a Low-Earning Noncompete Ban in Austria

Abstract

I study the effect of noncompete agreements on low-earning workers using a noncompete ban in Austria. The ban increased treated workers’ annual job-to-job transition rate by 0.3 percentage points (a two percent increase). This effect was driven by within-industry job transitions. The reform also disproportionately increased transitions to higher-quality firms and transitions accompanied by earnings gains. However, I do not find that the ban increased treated workers' overall earnings growth rates. This evidence shows that noncompetes in Austria restricted low-earning workers’ job mobility but that their impact was not large enough to affect overall mobility or earnings trends.