Date of Award

2025

Degree Type

Dissertation

Degree Name

Doctor of Juridical Science (S.J.D.)

First Advisor

James J. Prescott

Second Advisor

Daniel A. Crane

Third Advisor

Francine Lafontaine

Fourth Advisor

Yue Maggie Zhou

Abstract

This thesis, which consists of four essays, uses empirical methods to study questions on the use of mobility-restricting covenants in business and employment contracts.

The first chapter investigates the spillover effects of the so-called “No-Poach Initiative,” an enforcement action launched by the Antitrust Division of the State of Washington Attorney General’s Office in January 2018 that led 237 franchisors to agree to stop using no-poaching clauses—i.e., provisions in franchise contracts that prohibit franchisees from hiring each other’s employees—nationwide. I document that approximately one third of the franchisors not targeted by the No-Poach Initiative removed the no-poaching clause from their franchise contract, and that the tendency to drop this clause is unrelated to whether they operated in the State of Washington. By examining some of the mechanisms underlying these spillover effects, I also provide suggestive evidence that the risk of follow-up enforcement actions in other states and the common ownership of franchisors by the same parent company may be significant factors at play.

The second chapter, co-authored with Francine Lafontaine and J.J. Prescott, studies the use of mobilityrestricting covenants, including noncompete agreements but also confidentiality and non-recruitment clauses, in franchise contracts, which are an important and accessible category of business contracts. We find that many of these contracts impose restrictive covenants on franchisees but also on other individuals, notably franchisees’ business partners and family members, and in some cases, their managers and employees. Patterns in the use of these covenants across these individuals is telling, suggesting that in business contracts, the informationprotection role of such clauses is particularly salient.

The third chapter, co-authored with Tito Boeri and Andrea Garnero, explores the use of noncompete agreements in Italy, where the labor market is rigid and highly regulated, and job mobility is low. Based on a novel survey of workers, we find that noncompete agreements are common even in this rigid labor market, they often do not comply with the minimum legal requirements, and yet workers are not aware of their enforceability. This study suggests that institutions and labor market regulations are not enough to protect workers from the misuse of noncompetes, especially when targeted groups are not properly informed, and incentives to comply with existing laws are minimal.

The fourth chapter, co-authored with Tito Boeri, Tommaso Crescioli and Andrea Garnero, examines how the regulation of noncompete agreements for employees covered by collective agreements affects firm-level markdowns in the French manufacturing sector. Using a staggered difference-in-differences approach, we find that the regulation of noncompetes established by collective agreements leads to a 1.3%–2.2% reduction in markdowns on average.

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