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Do only high-income employees sign non-compete agreements?

By EconoFact
NO

Non-compete clauses in employment contracts restrict a person's ability to work for or to start rival firms. In 2014, 12% of those with less than $20,000 in annual earnings and 15% of those with $20,000-$40,000 in earnings reported having a non-compete. More recently, in 2018, The Hamilton Project estimated that between 16% and 18% of all U.S. workers were currently covered by a non-compete agreement.

In principle, non-compete contracts could be attractive to both workers and firms, for example, by incentivizing firms to invest more in their workers. But evidence suggests there is little negotiation of these non-compete contracts, which is inconsistent with well-informed workers bargaining for compensation in exchange for costly limitations on their career flexibility.

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EconoFact is a non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. Launched in January 2017, it is written by leading academic economists from across the country who belong to the EconoFact Network. It is published by the Edward R. Murrow Center for a Digital World at The Fletcher School at Tufts University.
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