The Clauses That Cripple Work: Non-Competition Agreements Are Holding Italy Back
This is not just an American phenomenon, as some might think. In Italy, too, non-compete agreements—contracts or clauses that prohibit workers from moving to a rival company or starting their own business—are common. This is revealed in research published in the Journal of Law, Economics, and Organization by Tito Boeri (Bocconi University, Department of Economics), Andrea Garnero (OECD), and Lorenzo G. Luisetto (Cleveland State University).
Their study, the first of its kind in a highly regulated European country, challenges the idea that non-compete agreements are a peculiarity of the flexible American labor market. Based on a large representative survey of over 2,000 private sector workers, the authors point out that 16% of Italians are bound by a non-compete agreement, a percentage surprisingly similar to that in the United States.
“Even in a rigid and highly regulated labor market, noncompete agreements are widespread, and often do not comply with the minimum legal requirements, and yet workers are not aware of their enforceability.”
Invisible constraints
“75% of agreements are legally unenforceable, but 54% of workers believe that a court would still force them to comply.”
In theory, these clauses should protect a company that invests in training or entrusts confidential information. In practice, however, they are also used to retain labor and keep wages low, especially among less skilled workers. Nine percent of workers and those in basic jobs say they have signed a non-compete agreement, even though they do not have access to any secrets. According to Tito Boeri, “75% of agreements are legally unenforceable, but 54% of workers believe that a court would still force them to comply.”
A problem of awareness (and power)
The study also reveals that only one in five tries to negotiate the clause, while over 70% accept it as it is. Some read it quickly, others—a surprising 7%—say they signed without even reading it.
The result is a system in which the law provides protections, but a lack of knowledge of rights and asymmetry of bargaining power make them ineffective. Even trade unions, the study notes, play no role in monitoring or negotiating non-compete clauses, unlike in other areas regulated by collective bargaining or in other countries.
Less freedom, lower wages
“Unenforceable noncompetes, that are more likely to be used just to deter workers from moving and not to protect business interests, go hand-in-hand with lower wages compared to likely enforceable ones”
Analyzing the data, Boeri and colleagues show that workers subject to “unenforceable” non-compete agreements earn on average less than those with clauses that comply with the law. The same is true if the clause was introduced after hiring without any change in job duties, rather than before the start of the employment relationship. As the authors write, “Probably invalid clauses are associated with lower wages and lower job quality than potentially valid ones.”
In other words, unlawful clauses penalize employees—and, at a systemic level, stifle mobility and competition, with negative effects on productivity and innovation.
What to do
Regulating the use of these clauses is necessary but not sufficient on its own. The authors suggest concrete measures: more transparency, the obligation to clearly indicate legal requirements in the contract, and a more active role for antitrust authorities against the abuse of such clauses. Alternatively, they conclude, an explicit ban could be useful, based on the model proposed by the US Federal Trade Commission during the Biden presidency: “A total ban,” they write, “could be the only truly effective solution, provided it is accompanied by adequate information.”
Tito Boeri, Andrea Garnero, Lorenzo G. Luisetto, “Noncompete agreements in a rigid labor market: the case of Italy”, The Journal of Law, Economics, and Organization, vol. 41, 2025. DOI: 10.1093/jleo/ewae012
