Localization of Knowledge and the Mobility of Engineers in Regional Networks
Management Science
Overcoming Local Search Through Alliances and Mobility
Management Science
Management Science
Small Worlds and Regional Innovation
Organization Science
Recruiting for Ideas: How Firms Exploit the Prior Inventions of New Hires
Management Science
Noncompete Covenants: Incentives to Innovate or Impediments to Growth
Management Science
The Circulation of Ideas in Firms and Markets
Management Science
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Whereas a number of studies have considered the implications of employee mobility, comparatively little research has considered institutional factors governing the ability of employees to move from one firm to another. This paper explores a legal constraint on mobility---employee non-compete agreements---by exploiting Michigan's apparently inadvertent 1985 reversal of its non-compete enforcement policy as a natural experiment. Using a differences-in-differences approach, and controlling for changes in the auto industry central to Michigan's economy, we find that the enforcement of non-competes indeed attenuates mobility. Moreover, non-compete enforcement decreases mobility more sharply for inventors with firm-specific skills and for those who specialize in narrow technical fields. The results speak to the literature on employee mobility while offering a credibly exogenous source of variation that can extend previous research on the implications of such mobility.