Anti-Poaching Agreements, Corporate Hiring, and Innovation: Evidence from the Technology Industry

(with Daniel Ferrés and Gaurav Kankanhalli)

Using the 2010 prosecution of U.S. technology firms engaging in anti-poaching agreements as a shock, we study the impact of labor market collusion on corporate hiring and innovation. During the collusive period, cartel firms displayed elevated job posting rates relative to comparable firms that were not party to these agreements. Occupation-level tests show that the effects were amplified in job roles critical to the firms’ operations. Textual analysis of job-ad descriptions provides evidence that cartel firms enjoyed greater bargaining power in the hiring process, with workers being offered lower flexibility, non-wage benefits, and training opportunities. Notably, cartel firms exhibited superior innovative capabilities over the collusive period, while the dissolution of the agreements led to a curtailment in their innovation output. Our results reveal important linkages between firms’ anti-competitive conduct in labor markets and their innovation and market valuations.