Economists justify government intervention in a market when, left to their own devices, economic agents produce an inefficient outcome—a “market failure”. Perhaps the most well-known example is the excessive accumulation of market power by large firms, which at the extreme can create a monopoly. Market power allows large companies to tilt the playing field in their favor, impose significant barriers to market entry, and ultimately squash competition. There’s also a less well-known mechanism through which large companies can stifle competition and innovation—by scooping up all the workers. There is reason to believe that in the tech industry, small companies are being systematically outbid by large companies in the market for talent. In a theoretically efficient market, workers receive compensation commensurate with their productivity. In an inefficient market, however, large firms can afford to hire talent at outsized salaries—even to perform tasks that do not put them to their best use. This is not just a problem for the small, innovative startups that compete with large tech firms. It is also a problem for the economy and wider society, since startups play a key role in commercializing scientific and technological advances which, in turn, benefit lives and produce economic growth. This grant supports James Bessen at Boston University, who is studying the conduct and consequences of labor markets where established platforms compete with startup firms for STEM workers. Bessen’s team will explore how competition for employees from large companies affects the growth, financing, and performance of startups, and the implications for policymaking. Their research will pay particular attention to the impacts on those startups whose founders are women or persons from marginalized groups. The project’s empirical approach will combine three datasets: Burning Glass data, which covers job openings; Crunchbase, a large database of corporations which contains information on firm founding and financing amounts; and Compustat, which provides extensive financial data on publicly listed firms. In addition to their own analyses, the team will make their code publicly available, creating a valuable public good for other researchers.