IZA Policy Paper No. 182: Policy Brief: Employer Market Power in Silicon Valley
Adam Smith alleged that secret employer collusion to reduce labor earnings is common. This paper examines an important case of such behavior: no-poach agreements through which technology companies agreed not to compete for each other's workers. Exploiting the plausibly random timing of a US Department of Justice investigation, I estimate that these agreements cost affected workers approximately 5 percent of annual salary. Stock bonuses and ratings of job satisfaction were also negatively affected.