Do firms have the right incentives to innovate in the presence of spillovers? This paper proposes an explicit channel of spillovers through labor flows within a framework of competitive search. Firms can choose to innovate or to imitate by hiring a worker from a firm that has already innovated. We show that with long-term wage contracts information spillovers caused by worker turnover are effi ...

We show that frictions in labor and capital markets can be a source of competitive advantage for a¢ liates of corporate groups over standalone …rms in environments where bene…ts from internal markets’‡exibility are high. We argue that the advantage of ‡exibility in changing labor inputs is related to how di¢ cult it is to change capital inputs. We predict that if substituting labor with capital...

Little is known about the magnitude of China’s SOE labor redundancy and the patterns and determinants of job creation. Such knowledge gap makes it difficult for decision-makers to provide prescriptions for China’s labor problems. This paper uses a panel data of Chinese provinces between 1986 to 1996 to estimate China’s SOE labor redundancy, and patterns and determinants of job creation in China...