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ANTI‐POACHING AGREEMENTS IN LABOR MARKETS
Author(s) -
Shy Oz,
Stenbacka Rune
Publication year - 2019
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12700
Subject(s) - poaching , welfare , productivity , profit (economics) , labour economics , competition (biology) , economics , wage , production (economics) , business , microeconomics , market economy , macroeconomics , ecology , population , demography , sociology , biology
We analyze competition for experienced workers among wage‐setting firms. The firms can design poaching offers with higher wages to workers who switch from rivals relative to wages paid to their own existing employees. We evaluate the profit and welfare effects of anti‐poaching agreements that eliminate poaching offers as a recruiting method. Anti‐poaching agreements increase industry profits, whereas workers are made worse off. We show that the effects of anti‐poaching agreements on total welfare are determined by the magnitude of workers' switching costs and the productivity change associated with switching employers. ( JEL L41, L40, J42)