Clause and Effect: Theory and Field Experimental Evidence on Noncompete Clauses

We study worker noncompete clauses in a large field experiment with two finance firms. Across ~14,000 job offers to freelance recruiters on short-term contracts, we randomize wages and the presence, salience, and duration of noncompetes. Removing a noncompete increases mobility between competing employers by 30-57% and raises workers' total earnings from the two firms by 12-16%. We find no evidence---rejecting even small effects---that removing noncompetes generates information leakage. We also find no evidence that workers choose noncompete jobs for higher pay. Many workers appear unaware of noncompetes before firms' post-employment communication. The results align with a model of inattention and uncertainty about enforcement.