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Regional Disadvantage? Non-Compete Agreements and Brain Drain

41 Pages Posted: 9 Aug 2010  

Matt Marx

Boston University Questrom School of Business

Jasjit Singh

INSEAD

Lee Fleming

Harvard University - Technology & Operations Management Unit

Date Written: July 21, 2010

Abstract

We construct inventor career histories using the U.S. patent record from 1975 to 2005 and demonstrate a brain drain among patenting inventors from states that enforce employee non-compete agreements to those that do not. Non-compete enforcement drives away inventors with greater human and social capital, while retaining those who are less productive and less connected. In addition to showing support for these conclusions in cross-sectional analyses, we address causality-related concerns with a difference-in-differences study design based on an inadvertent reversal of Michigan’s non-compete enforcement policy.

Keywords: non-compete agreements, labor mobility, technology policy, inventor migration, regional economics, patents

JEL Classification: O30, O38, R10, R12

Suggested Citation

Marx, Matt and Singh, Jasjit and Fleming, Lee, Regional Disadvantage? Non-Compete Agreements and Brain Drain (July 21, 2010). Available at SSRN: https://ssrn.com/abstract=1654719 or http://dx.doi.org/10.2139/ssrn.1654719

Matt Marx (Contact Author)

Boston University Questrom School of Business ( email )

595 Commonwealth Ave
Boston, MA 02466
United States

Jasjit Singh

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Lee Fleming

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States
617 495 6613 (Phone)
617 496 5265 (Fax)

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