A government implements a nationwide ban on non-compete clauses. An economic analysis of this policy change predicts two primary consequences: 1) a substantial increase in workers' ability to negotiate for higher pay, and 2) a slight reduction in firms' average profit margins. Given these two predicted consequences, what is the most likely net impact on the overall level of employment in the economy?
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A government implements a nationwide ban on non-compete clauses. An economic analysis of this policy change predicts two primary consequences: 1) a substantial increase in workers' ability to negotiate for higher pay, and 2) a slight reduction in firms' average profit margins. Given these two predicted consequences, what is the most likely net impact on the overall level of employment in the economy?
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Ambiguous Employment Effects of a Labor Market Policy