One Contract, Two Labor Markets

The high-education results complete the comparison that the low-education wage path began. This chapter asks whether the same change in non-compete agreement (NCA) status points to the same career consequence for workers with a four-year college degree or more, and whether either wage pattern tells us that workers are actually locked into their jobs. The answer is conditional: the study reports faster later wage growth for high-education workers, but the possible investment explanation is not directly measured, and job-tenure effects remain imprecise.

That combination matters because a single average effect would encourage a false choice. If the low-education result were the whole story, one might conclude that every NCA is a device for suppressing wages. If the high-education result were the whole story, one might conclude that every NCA protects productive investment. The evidence supports neither shortcut. It shows why worker group, job content, outcome, and time horizon must be kept together.

The high-education wage path points in the other direction

For high-education workers—those with a four-year degree or more—the estimated wage effect at the moment of signing is small and imprecise. That is similar to the low-education result on the immediate transition effect: the study does not find a clear, statistically reliable upfront jump that would establish a compensating premium. The difference appears after the transition. High-education workers who sign an NCA experience significantly higher wage growth over time than comparable transitioners entering jobs without one.

The comparison is therefore not “low earners versus high earners.” It is a comparison of trajectories under the same basic empirical question. At entry, neither group supplies a clear premium signal. Over the later horizon, the low-education path bends downward while the high-education path bends upward. The direction of the later gradient changes with the education grouping used by the study.

The high-education pattern is consistent with the investment account described earlier. A high-skill job may involve knowledge that is unusually valuable inside the firm, substantial firm-specific learning, or a relationship in which the employer expects to invest before receiving the full return. If the NCA helps make that investment more attractive, the worker’s later wage growth could reflect the value of the experience or the firm’s willingness to reward it. The paper says the results suggest that NCAs in high-skill labor markets may coexist with genuine firm-specific human-capital investment rather than functioning purely as rent extraction.

The word “may” is essential. The study observes NCA status, wages, education, and job histories; it does not directly measure the firm’s training expenditure, the knowledge created, or the portion of the later wage increase attributable to that investment. A positive wage gradient is evidence compatible with the investment mechanism, not a receipt showing that the firm trained the worker and that the NCA caused the training.

The direction of the result also does not prove that the agreement benefits the worker in every dimension.