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.