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45 J. Corp. L. 931 (2019-2020)
Noncompetes, Human Capital Policy & Regional Competition

handle is hein.journals/jcorl45 and id is 973 raw text is: 









        Noncompetes, Human Capital Policy & Regional
                                  Competition


                                  Orly Lobel



                                         Abstract
     In the past few years, human capital law has become one of the most dynamic policy
fields in the United States. Multiple states have reformed their noncompete  policies,
passing  new  legislation that limits their use. New bills that would similarly limit the
enforcement  of noncompetes are currently before Congress. Nationwide, both the use of
noncompetes   and litigation over their enforcement, are on the rise. As such, several state
attorneys general have taken up the issue by launching investigations into employers who
require their workforce to sign unenforceable noncompetes. An equally dazzling wealth of
studies, analysis, intellectual debates, and exchanges have emerged on the research side.
In particular, the past few years brought a significant number of empirical, experimental,
and  theoretical studies offering more evidence and explanations about the key role that
human   capital policy, including noncompete contracts, plays in industries and regions. In
this Article, written for a symposium honoring the scholarship of Professor Ronald Gilson,
I present the state of the scholarly field on human capital and economic competition and
develop  three arguments  about the future of noncompete research. First, in Part II, I
unpack  the multiple dynamic effects that job mobility and noncompetes have on regions.
Beyond   knowledge  spillovers, it is important to recognize a range of distinct, though
interrelated effects. These include at least ten important aspects that are supported by job
mobility: behavioral, dynamic, firm-level, and  regional-level effects. In particular, a
neglected aspect in the literature of noncompetes is the disproportionate harmful effect
noncompete   clauses may  have on  women.  Recent economic  research on  labor market
monopsonies   and the relationship between mobility and wage  growth allows us to see
connections  between innovation policy and distributive justice. Second, I argue that while
the  study of noncompetes  has been invaluable to understanding  talent flows, mobility
restrictions are far broader than merely formal covenants not to compete. Covenants that
restrict employee mobility appear in many  shapes and forms.  I introduce the range of
contractual restrictions that employers require in standard agreements and I argue that
these  restrictions, too, should be understood and researched through the lens of labor
market  competition and  mobility. Third, I argue that the prevalence of practices that
subvert policy requirements, such as including unenforceable restrictions in employment
contracts  underscores how  we as scholars need  to encompass  market practices in the
empirical  research, as well as recognize comparative advantages of proactive solutions


     1  Warren, Distinguished Professor, University of San Diego. For thoughtful comments and conversations,
 I thank On Amir, Rachel Amow-Richman, Peter Conti-Brown, Ronald Gilson, Michael Madison, and David
 Zaring. For excellent research assistance, I thank Meghan Brown, Hannah Karraker, Austin Trickey. Sasha Nufiez
 and Elizabeth Parker, who provided superb library support and smart suggestions.

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