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Title:Job-hopping in Silicon Valley: some evidence concerning the micro-foundations of a high technology cluster PDF Logo
Authors:Fallick, Bruce
Fleischman, Charles A.
Rebitzer, James B.
Issue Date:2005
Series/Report no.:IZA Discussion Papers 1799
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.
Subjects:job mobility
industrial clusters
Silicon Valley
innovation
knowledge spillover
non-compete agreements
JEL:R12
L63
O3
J63
J48
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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