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Job Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster

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Author Info
Bruce Fallick
Charles A. Fleischmann
James B. Rebitzer

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Abstract

In 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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11710.

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Date of creation: Oct 2005
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Handle: RePEc:nbr:nberwo:11710

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Find related papers by JEL classification:
R12 - Urban, Rural, and Regional 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
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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References listed on IDEAS
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  1. Daron Acemoglu & Joern-Steffen Pischke, 1998. "Beyond Becker: Training in Imperfect Labor Markets," Working papers 98-12, Massachusetts Institute of Technology (MIT), Department of Economics.
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  2. Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 779-804, August. [Downloadable!] (restricted)
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  5. Rotemberg, Julio J. & Saloner, Garth, 2000. "Competition and human capital accumulation: a theory of interregional specialization and trade," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 373-404, July. [Downloadable!] (restricted)
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  6. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June. [Downloadable!]
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  1. Edward L. Glaeser & William R. Kerr, 2008. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Harvard Business School Working Papers 09-055, Harvard Business School. [Downloadable!]
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  2. Jean-Etienne De Bettignies & Gilles Chemla, 2008. "Corporate Venturing, Allocation of Talent, and Competition for Star Managers," Post-Print halshs-00365942_v1, HAL. [Downloadable!]
  3. Cécile Aubert & Oliver Falck & Stephan Heblich, 2008. "Subsidizing National Champions: An Evolutionary Perspective," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  4. Evers, Hans-Dieter, 2008. "Knowledge hubs and knowledge clusters: Designing a knowledge architecture for development," MPRA Paper 8778, University Library of Munich, Germany. [Downloadable!]
  5. Ron Boschma & Rikard Eriksson & Urban Lindgren, 2008. "Labour mobility, related variety and the performance of plants: A Swedish study," Papers in Evolutionary Economic Geography (PEEG) 0809, Utrecht University, Section of Economic Geography, revised May 2008. [Downloadable!]
  6. Ulrich Kaiser & Hans Christian Kongsted & Thomas Rønde, 2008. "Labor Mobility and Patenting Activity," CAM Working Papers 2008-07, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics. [Downloadable!]
  7. Natalia Mishagina, 2007. "Empirical Analysis of Career Transitions of Sciences and Engineering Doctorates in the US," Working Papers 1137, Queen's University, Department of Economics. [Downloadable!]
  8. Oliver Falck & Michael Fritsch & Stephan Heblich, 2008. "The Apple doesn't Fall far from the Tree: Location of Start-Ups Relative to Incumbents," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  9. Hoyt Bleakley & Jeffrey Lin, 2007. "Thick-market effects and churning in the labor market: evidence from U.S. cities," Working Papers 07-23, Federal Reserve Bank of Philadelphia. [Downloadable!]
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