Silos

Abstract

Social forces partition human capital into pools of standardized skills (silos). Standardization facilitates the mobility of professionals across organizations within the same filed but discourages collaborations across fields. Economic crises force migrations of human capital across previously isolated sectors and, in the process, stimulate technological innovation. Consistent with the idea that crises promote technological change, we show that the filings of technology patents by non-tech firms increased significantly following the burst of the Internet bubble. The firms that hired the misplaced tech inventors during the 2001 recession were associated with greater innovation output and stronger operating performance after the recession.

Keywords: Creative destruction, human capital, professions, technological change, innovation

JEL Classification: D22, J24, O31, Z13