Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster
AbstractIn Silicon Valley's computer cluster, skilled employees are reported to move rapidly between competing firms. This job-hopping facilitates the reallocation of resources towards firms with superior innovations, but it also creates human capital externalities that reduce incentives to invest in new knowledge. Using a formal model of innovation we identify conditions where the innovation benefits of job-hopping exceed the costs from reduced incentives to invest in human capital. These conditions likely hold for computers, but not in most other settings. Features of state law also favor high rates of inter-firm mobility in California. Outside of California, employers can use non-compete agreements to inhibit mobility, but these agreements are unenforceable in California. Using new data on labor mobility we find higher rates of job-hopping for college-educated men in Silicon Valley's computer industry than in computer clusters located out of the state. Mobility rates in other California computer clusters are similar to Silicon Valley's, suggesting some role for state laws restricting non-compete agreements. Consistent with our model of innovation, we also find that outside of the computer industry, California's mobility rates are no higher than elsewhere.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1799.
Length: 30 pages
Date of creation: Oct 2005
Date of revision:
Publication status: published in: Review of Economic and Statistics, 2006, 88(3), 472-481
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Other versions of this item:
- Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2006. "Job-Hopping in Silicon Valley: Some Evidence Concerning the Microfoundations of a High-Technology Cluster," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 472-481, August.
- Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2005. "Job-hopping in Silicon Valley: some evidence concerning the micro-foundations of a high technology cluster," Finance and Economics Discussion Series 2005-11, Board of Governors of the Federal Reserve System (U.S.).
- Bruce Fallick & Charles A. Fleischmann & James B. Rebitzer, 2005. "Job Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster," NBER Working Papers 11710, National Bureau of Economic Research, Inc.
- Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2005. "Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster," Economics Working Paper Archive wp_432, Levy Economics Institute, The.
- Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2005. "Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster," Labor and Demography 0512004, EconWPA.
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-22 (All new papers)
- NEP-BEC-2005-10-22 (Business Economics)
- NEP-GEO-2005-10-22 (Economic Geography)
- NEP-INO-2005-10-22 (Innovation)
- NEP-TID-2005-10-22 (Technology & Industrial Dynamics)
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