Managerial Poaching and Talent Reallocation

Managers are an important component of positive talent reallocation: when a manager is poached, workers tend to follow. Using the universe of formal sector contracts in Brazil, we document that the co-movement of workers following a managerial poaching event is substantially larger than following a non-managerial one. We propose that managers hold high-quality personnel-specific information about workers that goes beyond what is observable to outside firms. We formalize this in a model of managerial poaching with asymmetric employer learning, in which more productive firms poach managers for their information about workers and subsequently raid high-ability employees. We derive testable predictions and show that the data supports each of them. In equilibrium, information rents lead to inefficiently low poaching, making managers both a catalyst for efficient worker reallocation and a hindrance to it reaching its welfare-optimal level.