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The Biden administration issued an executive order on Friday asking the Federal Trade Commission to look into regulating employee non-compete agreements, which restrain workers from using their expertise and limits future opportunities.
Matt Marx
Professor, Faculty Director of Entrepreneurship
Matt Marx, professor of entrepreneurship at Cornell University, is an expert on non-compete agreements. In new research forthcoming in Organization Science, he found that non-competes contribute to the “gender gap” in entrepreneurship.
“Most startups fail. Non-competes raise the risk of failure because it’s harder to hire workers with industry expertise. Examining all workers in 26 states from 1991-2014, I found that women are 15% less likely than men to found startups in states with stricter non-compete policies. Worse, it is high-growth startups that don’t get founded.
“Why does that matter? Because high-growth startups are the engine of job creation and innovation in the economy. But women are markedly under-represented among venture-backed startups (<10%). My study shows that non-competes contribute to that gender gap.”
