We show that when the researcher’s (observable but not contractible) contribution to innovation is crucial, a covenant not to compete (CNC) reduces effort and profits under both spot and relational contracts. Having no CNC allows the researcher to leave for a rival. This alleviates a commitment problem by forcing the firm to reward a successful researcher. However, if the firm’s R&D investment ...

Performance Pay, Training and Labor Mobility Market imperfections may cause firms and workers to under-invest in specific training. This paper shows that profit sharing may be a suitable instrument to enhance specific training investments, either by enhancing wage flexibility or by increasing the returns to training. As a result, profit sharing not only increases productivity by means of an eff...

This paper investigates the impact of the heterogeneity of the labor force on the spatial distribution of activities. This goal is achieved by applying the tools of discrete choice theory to an economic geography model. We show that taste heterogeneity acts as a strong dispersion force. We also show that the relationship between the spatial distribution of the industry (the wage differential) a...

Which people end up in which jobs is not merely a matter of the individual and human capital characteristics of workers and the requirements and rewards of jobs, but is also a function of the process by which persons and jobs are matched with one another (Granovetter 1981; Sørensen and Kalleberg 1981). A poorly understood component of the matching process is how workers and employers find infor...

We measure U.S. publicly traded companies’ exposures to skilled labor risk, i.e., the potential failure in attracting and retaining skilled labor, by the intensity of their discussions on this issue in their 10-K filings. We show that this measure effectively captures firm risk due to the mobility of skilled labor. We find that skilled labor risk is an important determinant of corporate compens...

Received: 6 September 2005 Revised: 30 May 2007 Accepted: 13 June 2007 Online publication date: 7 February 2008 Abstract Although knowledge flows create value, the market often does not price them accordingly. We examine ‘‘unintended’’ knowledge flows that result from the cross-border movement of inventors (i.e., flows that result from the move, but do not go to the hiring firm). We find that t...

We provide evidence on the dynamic behavior of net labor flows across US states in response to a positive technology shock. Technology shocks are identified as disturbances that increase relative state productivity in the long run for 226 state-pairs encompassing 80 percent of labor flows across US states in the period 1976 2008. The data suggest heterogeneous responses of both employment and n...

Social mobility is central to immigrant integration. Since first-generation immigrants in Europe and North America typically experience downward mobility when they migrate, they are over-represented in low-skilled or low-earning jobs, in many cases despite high levels of education. With upward social mobility, however, immigrants can break out of their position at the bottom of the labor market...

We address the interrelationships between residential mobility, labor market mobility, and commuting. The paper takes its starting point in recent findings in economic research which emphasise that job and residence relocation decisions imply forward-looking decision making. We examine job and residential mobility by means of bivariate models and interpret the outcomes in light of the search mo...