Department Seminar: Axel Gottfries

The final department seminar of the semester will be given by Axel Gottfries from the University of Edinburgh. He is a very talented macroeconomist, focusing on labor topics. Read more about him here: https://sites.google.com/site/axelgottfries/

"Dynamic Monopsony with Large Firms and Noncompetes"

How do noncompete agreements between workers and firms affect wages and employ-ment in equilibrium? We build a tractable framework of wage posting with on-the-jobsearch and large employers that provides a natural laboratory to assess anti-conpetitivepractices in the labor market. We characterize the impact of market structure and showthat noncompetes can sharply suppress wages. We validate the quantitative model withempirical evidence on the impact of mergers and noncompetes on employment and wages.Banning noncompetes in the US would raise wages by 4%. Wage gains are large when de-mand is inelastic, training costs are high, and when noncompetes are widespread.