The Value of Employee Retention: Evidence From a Natural Experiment |
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| Authors: | Kenneth A. Younge Matt Marx |
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| Affiliation: | 1. College of Management of Technology, école Polytechnique Fédérale de Lausanne, Lausanne, Switzerland;2. MIT Sloan School of Management, Cambridge, MA |
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| Abstract: | We estimate the firm‐level returns to retaining employees using difference‐in‐differences analysis and a natural experiment where the enforcement of employee noncompete agreements was inadvertently reversed in Michigan. We find that noncompete enforcement boosted the short‐term value of publicly traded companies by approximately 9%. The effect is increasing in local competition and growth opportunities, and offset by patenting. |
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