A recent paper by Advanced Analytical Consulting Group, Inc. (“AACG”) shows that the economic research behind the call to eliminate no-poaching agreements is wrong. The AACG paper, Measurement of Market Concentration Faced by Labor Pools: Theory and Evidence from Fast Food Chains in Rhode Island with No-Poaching Clauses, demonstrates inaccuracies in assumptions and results in previous research that claimed no-poaching clauses increase market concentration in the hands of employers to the detriment of employees. AACG’s research demonstrates how a set of no-poaching clauses alter concentration in labor markets based on the same models and geographic markets used in previous research about this topic. This paper also demonstrates the need for a new measure of concentration that reflects the extent of concentration of various groups of laborers that face differing employment restrictions within the same geographic and labor markets. The paper provides an empirical comparison of performance of the new concentration measure vs. the previously proposed measure of concentration in the same population (restaurant workers in Rhode Island) used in research cited broadly in the popular press, policy papers, and by regulatory/legal agencies in support of new legislative restrictions and corporate changes requiring the elimination of no-poaching clauses in franchise contracts.
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