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Mobility, Skills, and the Michigan Non-Compete Experiment

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Author Info

  • Matt Marx

    () (Harvard Business School, Harvard University, Boston, Massachusetts 02163)

  • Deborah Strumsky

    () (University of North Carolina-Charlotte, Charlotte, North Carolina 28223)

  • Lee Fleming

    () (Harvard Business School, Harvard University, Boston, Massachusetts 02163)

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    Abstract

    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.

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    File URL: http://dx.doi.org/10.1287/mnsc.1080.0985
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 55 (2009)
    Issue (Month): 6 (June)
    Pages: 875-889

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    Handle: RePEc:inm:ormnsc:v:55:y:2009:i:6:p:875-889

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    Related research

    Keywords: labor; statistics; design of experiments; organizational studies; personnel; strategy; research and development; innovation;

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    Cited by:
    1. Peter Thompson & Jing Chen, 2011. "Disagreements, employee spinoffs and the choice of technology," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 455-474, July.
    2. Michele PEZZONI (University of Milano-Bicocca - KiTES-Università Bocconi - Observatoire des Sciences et des Techniques) & Francesco LISSONI (GREThA, CNRS, UMR 5113 - KiTES) & Gianluca TARASCONI (KiTE, 2012. "How To Kill Inventors: Testing The Massacrator© Algorithm For Inventor Disambiguation," Cahiers du GREThA 2012-29, Groupe de Recherche en Economie Théorique et Appliquée.
    3. Rost, Katja, 2011. "The strength of strong ties in the creation of innovation," Research Policy, Elsevier, vol. 40(4), pages 588-604, May.

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